The Only Opinion That Matters in Investing

As I keep saying, it doesn’t matter what we think… it only matters what the market thinks.

Personally, I think it’s insane that the Fed has nationalized the entire debt markets.

Similarly, I think it was a massive mistake to shut down the economy. And I think that the human suffering created by this mess is truly horrific.

But stocks don’t seem to think any of this.

Stocks think that things are going to recover relatively quickly. I think that’s insane, but again, as an investor, it doesn’t matter what I think… it’s what the market thinks that matters.

With that in mind, stocks are breaking through resistance this morning. Multiple “risk” measures I track suggest we’re moving higher.

Bullish Signs from Market Indicators

First and foremost, let’s take a look at the ratio between stocks and Treasuries.

Stocks are a risk asset. Treasuries are a safe haven. So when this line rallies, it means stocks are outperforming Treasuries and we’re in a “risk on” environment.

Similarly, when this line falls, it means Treasuries are outperforming stocks and we’re in a “flight to safety” environment.

Note that the line is moving higher and has just broken above a 50% retracement of its collapse form March. That’s VERY bullish.

Stock treasuries

Another item I’m looking at are corporate credit spreads.

Credit spreads measure the difference between yields on corporate bonds and the yields on Treasuries.

Like stocks, corporate bonds (particularly junk bonds) are a risk asset. Treasuries are a safe haven.

So when this line rallies, it means junk bonds are outperforming Treasuries and we’re in a “risk on” environment.

Similarly, when this line falls, it means Treasuries are outperforming junk bonds and we’re in a “flight to safety” environment.

Note that this line has held support (red line) and is now breaking a downtrend. This too is a BIG “risk on” signal from the financial system.

Bullish signs

Again the fact that this is happening during an economic depression is insane to me. But as investors, it doesn’t matter what we think… it’s what the market thinks that matters.

And the market thinks more upside is coming.

Best Regards,

Graham Summers
Editor, Money & Crisis

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Graham Summers

Editor Graham Summers has spent the last 15 years building a reputation as one of the most sought after and highly respected investment strategists on the planet. His work has been read and quoted by former Presidential advisors, award-winning institutional analysts, U.S. Senators, and more. He’s one of the few analysts on the planet to...

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