Business As Usual

This morning’s revision to Q1 GDP exceeded most expectations, showing that GDP fell at a 2.9% annual rate. The propaganda machine promptly raised Q2 to 4% or better. Just because Q1 was worse. Really? But the market swallowed the nonsense, because it is a mania.

The reality is that declining GDP aggravates the market’s over-valuation. Which in turn makes the expected outcome worse.

However, the Treasury market, in more adult hands, responded more rationally – with falling yields. Of future concern is that high-yield bonds – junk bonds – continue to rally. That is storing up a big problem.

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