treasuries - compared to inflation - are absurdly overvalued.
why? because year-over-year CPI, including those little pesky items like food and energy that none of us use, is 4.0%.
ppi? 7%.
so what should we be receiving for 10 year notes? 7, 8, 9, 10%?
this is why companies like ge are willing to pay 200 basis points above treasuries. it's because their ROE is so much higher.
it's also why i don't buy the argument that muni's are 'cheap' because they are nearly 100% over treasuries. what's the point of comparing one security against an over valued benchmark?
it's like me using tiger woods as the benchmark for my golf game.
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