If you want to know just how clueless our Treasury secretary is then please consider Treasury Chief Calls Market Reaction to Fed 'Overblown'.

Steven Mnuchin, in an interview with Fox Business Network, said he believes U.S. equities are a “tremendous value,” and that investors would now move from bonds into stocks.

“The market reaction is completely overblown,” he said. “I think you’re going see rebalancing out of bonds (and) into equities at these levels.

Opinions vs. Errors

I strongly disagree with Mnuchin on valuations. But he is entitled to his own opinion, no matter how silly it seems.

His opinion is not the problem. His comments prove he is clueless how markets even work.

Mathematical Impossibility

It is mathematically impossible for investors, in aggregate, to "rebalance out of bonds into equities."

RECOMMENDED ARTICLES

The explanation is easy. For every buyer of a stock or bond there is a seller. For every seller there is a buyer.

Someone much hold every stock or bond issued, 100% of the time.

Individual investors may take action, but rebalancing cannot and will not occur in aggregate because it is mathematically impossible.

Repricing

Don't expect rebalancing (because it's impossible). Instead, expect repricing.

Equities are not cheap. Expect them to get hammered and junk bonds right along with them.

Buy gold, that's what's cheap (obviously my opinion).

Mike "Mish" Shedlock

Ultra-Long Bond Debate: Secretary Mnuchin Likes Them, His Committee Doesn't

Are ultra-long bonds a good idea? Treasury secretary Mnuchin and his advisors don't agree.

About Face: Navy Secretary Apologizes to Fired Captain

Navy Secretary Thomas Modly is in deep trouble over the way he handled the firing of captain Brett Crozier.

Hello Treasury Bears: About That 3.0% Treasury Yield Line in the Sand

According to numerous treasury bears, yields would soar out of control once the 3.0% threshold broke. Well?

Total Returns, Gold, S&P 500, Us Treasury Bonds: Do You Really Know the Facts?

Do you know what the total returns are in various asset classes? Reader Michael pinged me with an interesting chart of Gold vs. the S&P 500 vs. 30-year treasury bonds. Let’s take a look.

Spotlight on Emerging Markets and US Treasuries: Are Bonds Sending a Signal?

The emerging market trade has blown up. An "everything bubble" disaster awaits. Meanwhile, what about treasuries?

Trade Debate: US Mulls Lifting Sanctions on China to Hasten Deal, Calm Markets

Treasury Secretary Steven Mnuchin and Trade Rep Robert Lighthizer are on opposite sides of a heated debate on China.

Trump's Tariffs Show He's "Clueless About Trade"

What does Trump know about tariffs and trade deficits? Steve Hanke of the Johns Hopkins University provides the answer.

Inflation Coming? How About Deflation?

Economists expect higher inflation based on rising producer prices. But will producer prices feed consumer prices? When?

Treasury Yields Surge: Crowded Bet a Winner for Now

Treasury yields are up across the board, with the 30-year bond approaching a breakout level.