"Valenti International" analysts have warned clients that malinvestment will be severely punished in the coming weeks
. The firm says that its evaluation of markets shows that although bond yields in developed markets are plumbing record lows, the equity markets appear to be flirting with year highs.
"Valenti International" traders explained that the rising price/falling yields of government debt usually means that investors are more concerned about the return OF their money rather than return ON their money which appears to support the theory that investors are bearish on the economic recovery. In stark contrast, equity markets are pricing in increasing profitability for companies despite evidence of falling economic activity and declining revenues.
The "Valenti International" analysts believe that those seeking safe-haven investments like bonds are less likely to suffer losses than those still acquiring stocks at values the firm considers excessive. One said, "There is little evidence to support the perception that corporate revenues are headed anywhere but down in the next 12 months given the unemployment rate and the double-dip in housing. Only the prospect of additional quantitative easing by the Federal Reserve can justify the froth at these levels".
The "Valenti International" analyst went on to say that a relatively minor knock in confidence could send the price of stocks down sharply.