A cheesy Western standoff often begins with some variation of, “This town ain’t big enough for the both of us.”
That’s where we are now with stocks and bonds. And we’re approaching the point where the town ain’t big enough for either of them.
The Treasury continues to pound the market with massive amounts of new supply. But Treasuries held their own this month. In fact, they rallied a bit.
Instead, stocks got their turn in the barrel. This illustrates the point I have been making that there’s no longer enough liquidity in the system to support bull moves in both stocks and bonds. If one rallies, the other must be the source of funds for that rally. So in March, stocks were the liquidity sink that supported the rally in bonds.
And don’t be fooled by Thursday’s rallies in both stocks and bonds: neither baseball, life or financial markets move in a straight line. They are full of surprises. But there’s always a broader arc that contains these surprise days. Our job is to identify the direction of that arc. And in this case the forces of that broad arc are pointing down.
The post Bonds Up, Stocks Down – The Sinister Truth Behind March’s “Portfolio Rotation” appeared first on Lee Adler’s Sure Money.
The post Bonds Up, Stocks Down – The Sinister Truth Behind March’s “Portfolio Rotation” was originally published at The Wall Street Examiner. Follow the money!