When the feeling's right
I'm gonna run all night
I'm gonna run to you
Last month we suggested that higher yields on fixed income will create a competition with stocks for investment capital. Some early evidence of this is showing up in REITS...
The higher the yield in 'risk free' Treasuries and other fixed income assets, the less attractive stocks--even 'high yielding' ones--will appear to investors.
My sense this will become more apparent if we experience an air pocket in stocks as it will snap investors out of their hypnotic 'stocks only go up' state. When that occurs, investors will run en masse to bonds as they 'rediscover' the 'safety' of fixed income.