On Tuesday we reviewed a situation that showed the S&P 500 Index, many Eurodollar and Treasury futures as being "stretched" and at risk of reversing. Additional technical conditions pointed toward that risk as well. While always fearful that an interest in being "the smartest guy in the room" had clouded right-thinking, we suggested that weaker equity prices in part would buy Treasury prices.
Zero-bound money – quality aside – lowers incentives to expand loans and create credit growth. Will Rogers once humorously said in the Depression that he was more concerned about the return of his money than the return on his money.