The new decoupling
Credit from equity. It’s not a new concept but haven’t yet seen it represented as neatly as in this graph.
The team at Bank of America have produced this effort, which shows just how richly equities are trading on a historical basis relative to credit spreads. Credit, they add, appears to have overshot.
But they fear that further significant government intervention, say to stem the downwards spiral of US house prices, may come only after a greater hit to the market most watched by policy makers - stocks.
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