You want more talk about the bond rally?

You got it.

Here's David Rosenberg of Gluskin-Sheff on why equities and economists just don't get it, but that the bond market does.

The yield on the 10-year note hit its nearby peak on April 5, at 4.01%, and has since plunged nearly 120 basis points.

Declines of this magnitude very often presage the onset of bear markets and recessions. Typically, equities and then economists are late to the game. Nothing we are seeing is any different from the past, at least on this score.

What is key to note is that the bond market is the tail that wags the stock market’s dog — it leads.

The 10-year note yield peaked on May 2, 1990 at 9.09%. By December 12, 1990, the yield was all the way down to 7.91%. The S&P 500 peaked on July 16, 1990, the same month the recession started. So Mr. Bond led both by over two months — the 120 basis point slide in yields by December provided ratification (though there were still some, including Alan Greenspan at the time, who still believed a recession had been averted).

The yield on the 10-year T-note peaked at 6.79% on January 20, 2000 — the stock market peaked less than eight months later on September 1. By November 28, 2000, the yield had plunged to 5.59% — down 120 basis points (as is the case today), again providing ratification that we were not heading into some routine soft patch. Indeed, the recession started in March 2001, so the bond market again played the role of the real leading economic indicator, not the stock market.

Then in the most recent cycle, the 10-year T-note yield reached its high on June 12, 2007 at 5.26% — by November 21, it was all the way down to 4.00%. The S&P 500 peaked on October 9, 2007, three months after the peak in the bond yield. Yet again, a 120 basis point slide was the smoking gun for the economic downturn — it was called the ‘hard landing’ then, though the plethora of economists decided to look the other way; and today it is called the ‘double dip’ and once again this view is met with widespread ridicule from the economics intelligentsia.