June 10, 2016 5 am eastern

In Glasgow now and fly out tomorrow morning. In two weeks in the U.K. I saw about a half hour of light rain while driving and other than that a half day of overcast and the rest was basically bright and sunny and temperatures of mid twenties. Apparently the best start to summer in years.

On Thursday, the S&P 500 was down about 0.2% and Toronto was down 0.5%. Canadian Tire was down 2.0% to $138.

European interest rates are once again plumbing new lows with the German 10 year bond yielding 0.16% and with talk of it going negative. I came to accept the logic of a negative short term government bond under one year since a┬ácompany with millions in “cash” can’t very well keep that in the office safe and so they might accept negative rates for the safe-keeping. But to lock in 10 years for negative rates or even very very low seems crazy. If it is for ten years they ought to be able to find safe storage for and convert to paper currency? Or perhaps that is too old fashioned. Any company investing in a ten year bond must feel that simply going with a one year and rolling that over will result in even lower returns. It is indeed all very strange.

Meanwhile in the U.S the ten year is far higher at 1.68% and is down only quite modestly in the past month.

It would be nice if the FED would raise rates this month to begin to end this madness of ultra-low interest rates.

I would say with rates so low, the value of stocks can certainly go higher if it is expected that rates will stay low. I am happy with the yield on Boston Pizza for example given these low rates. Even if rates rise a little stocks could stay high as they never were pricing in these rates to continue for a long time.

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