The growing U.S. confidence is not a good omen for the markets. Yields on Treasury notes and bonds are increasingly at odds with the U.S. economy’s performance and outlook.

This kind of comparison from Bloomberg highlights just how much U.S. yields have recently been impacted by international fears.

Bloomberg: Bond Yields and Consumer Confidence

Following a 204% rally since March 2009, the S&P 500 trades at about 19.7 times bottom-line profits, compared with an average of 21.3 since 1980, data compiled by Bloomberg and S&P show. At the same time, the index’s price-sales ratio has risen to about 1.76, the highest since the end of 2000. The benchmark gauge slipped 0.4 percent at 4 p.m. in New York.

Investors are experiencing the most volatile start to a year since 2010 as energy earnings slumped with oil and a stronger dollar hurt sales overseas for companies from Procter & Gamble to Pfizer. The S&P 500 has swung an average 0.92 percent each day, compared with 0.69 percent a year ago.

Anxiety is growing as the Federal Reserve prepares to raise interest rates for the first time since 2006 amid improved employment. The U.S. labor market in January 2015 added 257,000 jobs, more than economists forecast, and average hourly earnings jumped the most since November 2008, figures from the Labor Department showed Friday in Washington. While the jobless rate for the overall population was 5.7 percent, the rate of workers who hold a bachelor’s degree or higher sank to 2.8 percent, its lowest level in more than six years.

The European Central Bank is preparing a bond-purchase program, designed to bolster the region’s economy and rein in deflation. Greece’s exit from the euro is just a matter of time because no one wants to risk lending money to the country any more, according to Alan Greenspan. He said that the nation’s crisis can’t be resolved as long as it remains in the single currency. He thinks it’s just a matter of time before everyone recognizes that parting is the best strategy.

The common belief of almost all traders is that deflation has been exported from Europe to the U.S. and shall continue for a few more years, the emerging markets will continue to underperform as commodities continue to retreat, the U.S. dollar will remain in an uptrend indefinitely, the euro has no chance of staging a significant rebound, and interest rates will continue to decline as inflation subsides on a global basis. On the surface it looks like the U.S. Federal Reserve has solid control of the domestic economy

We truly do not agree with this present school of thoughts. However, one must go with the flow and that is why we designed the two new Active US trading portfolios. It all will unfold sooner or later and markets can stay irrational for a long time.