There is no problems whatsoever ever with crude oil, commodities, growth etc. These factors are talked about by people who don't have any idea what is happening.
Actually it is simple maths + human nature. Human nature suggest people want to invest for reasonable returns with minimum risk. Maths suggest reasonable returns means best returns in terms of asset Class like equity, commodity, bonds, real estate etc.
Now let's combine the 2. S&P 500 annual dividend yield stands at 1.69%. The 10 year average is 1.85%. The 1 year US bond yields are at 3.42% and 2 year is at 3.5%. It means people with COMMON SENSE will invest in bonds rather than equities due to higher returns and better safety.
Actually it is simple maths + human nature. Human nature suggest people want to invest for reasonable returns with minimum risk. Maths suggest reasonable returns means best returns in terms of asset Class like equity, commodity, bonds, real estate etc.
Now let's combine the 2. S&P 500 annual dividend yield stands at 1.69%. The 10 year average is 1.85%. The 1 year US bond yields are at 3.42% and 2 year is at 3.5%. It means people with COMMON SENSE will invest in bonds rather than equities due to higher returns and better safety.
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The risk in equities also increases with the fact that the COST OF MONEY INCREASES due to higher interest rates. Now, why the fear of interest rates? The reason is simple.
If returns on 2 year bonds is higher than 1 year returns, it means that the market believes the higher interest rates situation will continue LONGER THAN PREVIOUSLY EXPECTED. Hence money is shifting from high risk high cost asset class to low risk better returns asset class.
Read it carefully. You will never get anything like this anywhere.
The risk in equities also increases with the fact that the COST OF MONEY INCREASES due to higher interest rates. Now, why the fear of interest rates? The reason is simple.
If returns on 2 year bonds is higher than 1 year returns, it means that the market believes the higher interest rates situation will continue LONGER THAN PREVIOUSLY EXPECTED. Hence money is shifting from high risk high cost asset class to low risk better returns asset class.
Read it carefully. You will never get anything like this anywhere.
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