——We have studied markets going back to day one. Our software allows us to backdate. We have studied central banks. We have studied market reactions to central banks. For years, we have told you the past 10 years saw central banks both here and around the globe time their easy money moves to markets. We have seen the Bank of Japan have no problem with owning over 4% of their market and over 50% of their ETFs. We can go on and on. But 10 years into this experiment with easy money, it looks like we may be just getting started. We do not know what is at work here but take a gander at this:——
Negative Bond Yields through…
30 yrs: Switzerland
15 yrs: Germany, Netherlands
10 yrs: Japan, Denmark, Austria, Finland, Sweden
9 yrs: France, Belgium
8 yrs: Slovakia
7 yrs: Ireland, Slovenia
6 yrs: Spain
5 yrs: Portugal
3 yrs: Malta, Bulgaria
1 yr: Italy
——In Switzerland, you are paying the government to loan THEM money…and for 30 years. Who in their right mind would do that? In recent weeks, we have seen India and Australia lower rates. We have seen China add over a trillion to their system, Just this week, the ECB announced the potential for more rate cuts and more printed money even though their rates were already negative and they have already printed trillions.—–
—-And then there is us. Let’s see…—-
U.S. Large cap indices are back near all time highs.
Unemployment is in the 3s.
GDP was 3.2% last quarter.
Oil prices are dropping helping the consumer and business big time.
The 10 year is yielding 2% making mortgages much cheaper for the average American’s largest purchase.
80% of IPOs that have been coming out have losses, some with huge losses.
Froth is showing up in the market. Think fake plant-based meat.
—–With all that, one would expect a central bank would be tightening. At least that is what would have happened back in the good old responsible days. But instead:—–
PARTICIPANTS SEE A STRONGER CASE FOR RATE CUTS
PARTICIPANTS SEE A BETTER CASE FOR ACCOMMODATION
—–Yup…it looks like Jay Powell earned back his invitation to the Christmas party at Mar-A-Lago.—-
—–We wish we could tell you what is in all these maniac’s minds that run central banks around the globe. We can’t. We are just letting you know the getting stronger big-cap market here combined with a new round of easy money could lead to some climactic action to the upside. No…we do not predict anything. We always let the market action be our guide. But we know easy money and we know the outcome of easy money. If price breaks out of range to the upside in the majors, it could get interesting. But warning….none of this is normal…and guess what happens to late climactic moves? Gonna be an interesting ride from here.—-
—–And one last note: We heard Gundlach tell Neil Cavuto today that he expected a recession in the next year. Two things: 1) If that is to occur, markets will know it a few months in advance and go into bearish mode. 2) If that is to occur, we guarantee you this fed will take rates back to 0% and start another round of maniacal money printing. Yippee!—–