As one looks around the investment universe, it is hard to believe where some products are trading. Dividend yields on some good quality stocks are at 2x the level of 2 yr treasuries. As this financial mess works its way through the python, these spreads are going to narrow. The easy trade right now is to be sitting in cash which implies 1yr or less paper-and given the issue of what is some of this paper, the less sophisticated are buying treasuries. Even some munis are suspect now that real estate prices have declined-(munis get their revs from property taxes).
Bonds are the next bubble to pop-once the flight to safety runs its course, investors are going to wake up and realize that interest rates are way too low.
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