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Ever notice how, in the eyes of the media, the bond market is never in a bubble? No, that’s only for tech stocks and real estate. Look at the five-year Treasury yield (^FVX): It’s down to 3.75%, that’s its lowest yield in over two years.

When Baidu hits $400, well...that’s irrational. Yet, if the bond market does that same, it’s assumed to be correct. Where are the editorialists and central bankers wagging their fingers at the moral laxity of the investing public? Can anyone get Bob Shiller on the line?

The same thing goes for currencies and the bond market. Does the fact that every single commodity rally since, oh...the Enlightenment, has ended the same way, the media considers these judgments to be sound? If oil is at $100, the problem is easy, we drive too much! Gold’s at $900? Yikes, they must know something.

I don’t see how a yield of 3.8% is suitable competition against equities. The S&P’s dividend yield is about half that. What kind of equity premium are we talking about?

Rant over.

Posted by edelfenbein at November 9, 2007 10:06 AM