Basket Case General Electric Is Still Valued More Than Siemens

Automatic TRANSCRIPT

Earnings were coming out and then also on the fixed income side so on earnings i'm just going to touch that real quick we had a couple of industrial companies caterpillar and three m who can erase some doubts with earnings and their ongoing earnings growth by giving the market the impression that hey this first quarter earnings is as good as it's going to get the high watermark so the market didn't love that but you know we've been talking a lot about earning so rather than focus on that i'm going to jump right into the big news which was that ten year us treasury yield win above three percent for the first time since two thousand fourteen and he just as a reminder out there guys even though the fed is gradually raising these shortterm interest rates they don't control other euro yields like the ten year treasury so it's on its own it's it's running high so you know it does continue rises huge fiscal deficits mean and increase in government borrowing and again the fed continues to unwind its balance sheet what's interesting is why are rising bond yields an issue for stock investors right that a lot and there's actually a lot of reasons for that among other reasons high stock valuations which currently we have right now and record us corporate debt make rising bond yields risk to the stock market there's certainly the spillover potential investors so far have started off increasingly expensive us stocks in recent years and in part due to solid earnings but also largely because of the low interest rates in almost no inflation so investors already knew that earnings would be great and companies would beat the solid double digit returns that were expected so although we continue to see good earnings numbers there really isn't a lot of unpredictability surprise there however as yields and inflation rise earnings alone might not be enough to propel stocks ira from here you know a three percent yield on the treasury.

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