I probably have more toes on my feet than people on my list of 'market gurus' that I listen to. Bob Hoye happens to be one of them.
For those of you not familiar with his work, he is not only a trader/investor, but also a market historian of epic proportions in my opinion. He runs a publication service over at Institutional Advisors covering everything under the sun - stock market, yield curve, credit spreads and energy prices.
When I worked at Haywood Securities I had the privilege of reading his market commentaries on a regular basis (for free of course) and he always had a very unique approach to the markets. What I like about his style is he looks at things from a historical perspective by finding interesting cycles and/or correlations and tonight I came across a video of his:
Things are not looking so rosy according to him - and I agree.
HERE you'll find a recent update of his, expanding on what he mentions in the video with respect to interest rates. I have taken the liberty of cutting and pasting the 2nd chart in the pdf file below.
As you can see we're currently experiencing rising interest as a result of the belief that the US economy is in recovery mode - hence the inflation worries. I strongly suspect these beliefs are not only ill-founded but downright asinine, but unfortunately that is the way markets work. That's not to say that I'm right - but logic would suggest we are FAR from recovering.
What I have suspected - in private at least - is there will be a reversion of those rising interest rates when equities start to sell off hard, persuading buyers into the bond market. When markets finally bottom (in nominal terms) late-2010 through mid-2011, I expect interest rates to creep up again.
EDIT: There was a lot more I wanted to add to this post but my girlfriend's parents came over and we we're drinking wine, so I wasn't able to complete this in its entirety. I'll finish it tomorrow...I have some very interesting stuff for you guys.
