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Notes to myself, possibly of interest to others.
-- Bill Northlich

Monday, October 5, 2009

Rosenberg Daily - 5 to 10 Years of "L"

... the article on page A2 of today’s WSJ cites a Rutgers study suggesting that we will not see 5% on the unemployment rate again until the end of 2017; Global Insights has a 5.75% jobless rate occurring no sooner than 2019 (see It Will Be Years Before Lost Jobs Return – and Many Never Will).

In turn, this implies that the chances that we get to $83 on S&P operating EPS, which the equity market is in effect now discounting a doubling from current levels, could take at least that long to occur (five to 10 years). Again, this means that income-focused investment strategies are going to remain critical in terms of generating adequate real risk-adjusted returns for the foreseeable future.
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Real rates (10-year TIPS) are at six-month lows of 1.5% and the yield curve has flattened dramatically in recent weeks. Bonds are trading as if they expect a 20% correction in the stock market. (My italics).

...Rosenberg 10.5

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