No matter how you slice it, markets are in a bubble of historic proportions – by David Rosenberg (Financial Post – September 3, 2020)

We are in a huge bubble now. Vaccine or no vaccine. Economic and earnings recovery or not. With or without the massive monetary creation by the U.S. Federal Reserve. This is a bubble of historic proportions.

Some will say that the valuations are supported by interest rates. Frankly, real 10-year rates moved into negative terrain in January, before the stock market plunged and before the recession began. Now, they have become even more negative.

There is actually no such thing as a free lunch and the thing about negative rates is that they coexist over time with a flat economy. And that economy is where earnings are derived from.

Don’t be fooled by the fact that the monthly U.S. data are beating “expectations” (like earnings). At the margin, economic momentum is starting to wane in the more up-to-date data. The bounce we saw previously in consumption growth is ebbing.

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