Posts Tagged ‘ all-time highs ’

Turkey Day Highs

November 29, 2016
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Turkey Day Highs

The bull market is set to turn 9 in 2017. Vanquished by the bull: Eurozone crisis, deflation, China bubbles, taper tantrums, BREXIT, and now Trump. The bullishness of the tape continues to shock, with the Trump rally, after the fact, looking strikingly similar to the BREXIT rally; the market provides every indication that one outcome is good, the other outcome bad, it gets the bad outcome, and not only fails to sell off, but rallies on it! Enough to generate plenty of Aflac goose head shakes. Why did the market change its mind on Trump? Firstly, a Trump victory was never really “bad” it was just unfathomable, and Trump’s campaign rhetoric was at times, preposterously market unfriendly (forcing production in the US, undoing global trade). Upon further consideration, the...

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Volatility Suppression Challenged

September 12, 2016
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Volatility Suppression Challenged

Since the BREXIT rebound/rip, it’s been an exceptionally stable summer. Few predicted that the unexpected BREXIT vote, would be an unequivocal positive to markets. The tell, quite clear after the fact, was the global rate plunge, and the US 10-year yield sinking to the 1.35% range, around the 4th of July. The perfect combination arose to send markets to all-time highs during the summer, a scary event (BREXIT) that lowered global rates, took the Fed off the table, and led to stimulus as far as the eye could see in Europe/elsewhere, all while not really impacting the US economy. As long as “lower-for-longer ” (interest rates), a BREXIT residual, remained in-play, volatility suppression reigned, and equities could grind higher. While the dynamic persisted all summer, it came undone the...

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On Sentiment; How the Market Mini-Crashed and Exploded Right Back

November 4, 2015
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On Sentiment; How the Market Mini-Crashed and Exploded Right Back

The stock market is on fire. As negative, dour, downbeat, and gloomy was August, the market this fall (early fall), is contrastingly, positive, nonchalant, optimistic, and even euphoric. So it goes; a fast 11% sell off over 6 trading days, on little more than poor sentiment, and a 3% Chinese currency devaluation, followed by an incredible global recovery on dramatic global central bank stimulus and, well, things not being quite so bad in China (for now). In retrospect, it’s always easy. The economic machine works as a process (using Ray Dalio’s terms), and short of a deep freeze of liquidity, economic activity doesn’t shut down over night. The global economy isn’t ready to slow dramatically; the US is still too strong, and global central banks still too eager to...

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S&P2K; a new highs odyssey

August 28, 2014
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S&P2K; a new highs odyssey

Please excuse the summer lull – anticipating more regular posts after a well needed period of summer travel! Two posts ago (in late May) focused on the market ascent to 1,900. In relatively short order, another centennial milestone is surpassed with the market melt-up to 2,000 over the past 15 trading days. Recapping the market action this summer (while CJF was on hiatus):         market hit new highs in July multiple on the S&P 500 approached 16.5x (notably representing new cycle highs) several geopolitical fears hit (Iraq, Syria, Israel, Russia/Ukraine) none of the geopolitical fears came close to corralling the bull (only a 4% pullback ensued) still no correction of 10% (for those keeping track it’s been over 1,000 days since one) since Aug 7th, there...

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A tale of two growth rates; GDP and US corporate profits

June 3, 2014
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A tale of two growth rates; GDP and US corporate profits

Last week’s “second” 1Q14 GDP print revised to a -1.0% annualized growth rate relative to the prior print of +0.1%. The second 1Q14 GDP print was shrugged off, with equity markets rallying to new highs, in impressive fashion, given the seasonally low volumes around Memorial Day. While the 1Q14 print is still not “final” (there will be third print, and an ultimate benchmark revision) there is little fear for two consecutive down GDP quarters; the typical definition of a recession. Nonetheless, the real economy is still punk. The performance between the real economy, and the environment for corporate profits, is often confused, and wrongly, treated as one and the same thing. CJF holds the view that what’s ok for the economy is a nirvana for corporate profits. If the...

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