Markets Are Profoundly Unhealthy Now

2014 was the best of times and the worst of times in financial markets. Stocks rallied, of course, while bond yields and commodity prices plunged. In 2014, the S&P 500 gained 13% while the yield on 10-year Treasuries dropped from 3.03% to 2.17%, and the price of oil collapsed by 50%.

And the all-important U.S. dollar rallied as other major currencies such as the euro and the yen plunged. Investors looking for a consistent message from markets had to look elsewhere.

In January 2015, a similar theme spooled out in a completely different way…

The S&P 500 lost 3% – its worst performance in a year – while Treasuries had their best month in five years, as interest rates plunged to record lows around the world. In fact, yields on government bonds in many places are negative, a profoundly unhealthy phenomenon.

Crude oil dropped for the 7th month in a row, something it did during the 2008/9 financial crisis, even after a manic rally on Friday, January 30. The U.S. dollar continued to rally for the 7th month in a row and had its best month since May 2012.

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