I agree- DOW has been going up on negative data like job reports and POOR EARNINGS now we entering the reporting season which experts think we going to see the impact on companies quarterly reporting - some say we entering a "earnings recession " some expecting single diget declines - we haven't had real growth - most growth has been service jobs not manufacturing - so we can not sustain current valuations
China pullback + currency wars:
China is not done with devaluing the Yuan so there is minimal chance the US will do rate hike in September
Now take a look at US student debt & Auto debt- its reached $2 trillion which is out of control and is essentially a bubble not dissimilar to the housing sub prime bubble that popped in 2008 - US markets now once again in bubble territory
Calls now for Fed to push out rate hike until mid 2016 due to China slowdown, oil price slump and resource commodity downturn
Now if rates go higher when inflation is raging - makes sense but if inflation is nil or nothing or even heading lower we have deflation or zero growth!
Oil prices are a good indication of inflation as when oil is falling and in free-fall as we are seeing, thats a powerful sign of deflation
When we get signs of deflation the bond prices usually go higher and when bond prices go higher means their yields go down , which in turn means lower interest rates ahead -
Also don't forget the US Debt ceiling will be hit on November 5th so lots of manipulation IMO
