We may see an equity market crash soon, especially if the economic data begins to get worse at a quicker

pace. Either way it will be interesting to see how these divergences play themselves out in the coming months. Picture 1, bonds are telling a different story right now than equities. The yields, especially on the front end of the curve, continue to go lower and are at levels last seen in late 2008 during the financial turmoil. The divergence is growing and my bet is that bonds are right on this one, especially when digesting the next two charts. Picture 1 shows the yield on the 10 year Treasury bond (blue line) compared with the S&P 500 index (red line) over the past 10 years. Picture 2, the consumer metrics group growth index is pointing to a much different future than the stock market. This future is more in line with what the bond market is predicting. You can see a similar divergence in picture 2 that you see in picture 1. Picture 2 shows the consumer metrics group growth index compared to the S&P 500 index over the past 5 years with actual GDP growth in the background. Picture 3, notice just how significant the correlation is between the consumer metrics group growth index and the actual change in GDP. This makes sense intuitively as 70% of the U.S. economy is made up of consumer spending.

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