Disconnected Equity Markets

EURUSD Slides To 2 Year Low As Reality Supercedes Hope | ZeroHedge.

While the commodities, bonds and currency markets have been signalling more bad new to come, the stock markets have been holding up nicely. Allow me to give you two reasons why this is happening.

The first is that technical factors seem to prop up the markets. A lot of people have 401k plans and dollar cost averaging plans that buy equities at regularly scheduled intervals. People do not cease these plans until after a crash.

The second is that equity investors seem to be more optimistic as a rule than fixed income investors. Equity plays can be like buying a lottery ticket, but bond investors generally want a stream of income and preservation of their principal. 


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