I wish you’d stop posting Prechter’s perma-bear-guru B.S. all the time. Or, at least move the byline to the bottom of such articles so it stops annoying people.

Economics is so interesting, because although it is cyclical, it never exactly repeats itself. Who would have guessed a decade ago, that we would soon see gold above 1000, oil in a strong uptrend and interest rates at 0.1%.

Can’t argue with you Nick. But we have so little history of how interest rates rising from zero will impact the stock market. The normal rule is three steps and a tumble. But will that apply if interest rates are coming from zero? Are 1% interest rates competition for a market that will be yielding 4-4.5% by year end. I wouldn’t be surprised if the market rallies after the first hike, maybe a one day pullback after the second, a one week pullback after the third, then some major headwinds thereafter.

I have stated in here before that I thought rates should already be headed back to 1%. LEI has been in strong uptrend for 6 straight months. Today’s GDP confirmed LEI’s trend.. Not that the Fed should be tightening the noose, but simply working from the current crisis mode to a normal accommodative mode (1-1.5%).

But the quantitative easing by the Fed is scheduled to end in the first quarter of next year. And the US government is planning to sell a lot more US treasury bonds throughout next year and for years to come after that. Which could easily lead to high US bond interest rates. And high interest rates would certainly attract a lot of money out of the high P/E stocks and into US government bonds.

It all depends on how quickly bond interest rates go up and how quickly the stock markets will react to that. If bond interest rates go up quickly and go up a lot. Then it’s quite possible that a stock market crash would follow, even if the economy isn’t doing quite as badly as it did during the Great Depression.