Our themes have not changed.
We continue to believe and have been proven correct that earnings growth is poor, sales growth is poor and the economy is blah! 1.2% ain’t going to do nothing for no one!
We continue to believe the maniacal central banks will continue to leave rates at 0% or below, go further into negative rates, print more money and continue to outright buy up markets. At this point, they will never ever be able to stop. Markets are addicted to it. If they even blink, markets would be smoked. In fact, all we have seen since the low in February is an increase in all of this nonsense…which has directly impacted things…specifically the biggest bubble in history, world bond markets. Who the hell in their right minds would lend anyone long term at negative rates? Answer is…central banks. Answer is…those that are forced to. Answer is…those that actually believe they will make money as rates go more negative. Just remember, economics 101 states that the more debt you have, the more you need to compensate lenders with higher rates. But there is no economics 101 right now as the whole system is rigged.
As far as markets, technically, we have very little in the way of complaints. As long as the Dow and S&P remain above their breakout levels, we are fine. Our biggest worry right now is the eerie calm and complacency which typically occurs when markets refuse to sell off…even on supposed bad news. We would like to and rather see some fear but right now, nothing doing.
Major indices remain in good shape. In fact, after the breakout of the Dow and S&P out of the long trading range, action has been very tight. A move above the tight range will only put another point in the bullish camp. Look for NYSE 10,815, S&P 2075. The DOW lags a bit off a few names not acting well…the NASDAQ/NDX has already gone topside with the move in some very influential big-cap names…namely Google, Amazon and Apple.
There remains a ton of cash on the sidelines which is poteial ammo for higher prices.
Gold/silver remain very strong as the race to the bottom on currencies and the printing of money continues. In fact, all pullbacks are short-lived and controlled.
Other commodities, namely steel are strong as the dollar rolls over.
Oil prices remain weak because of oversupply and slack demand but just letting you know many oil stocks are outperforming the commodity. Many report earnings this week.
Foreign markets remain weaker than the U.S. market but many are starting to come on. This is something that needs to be watched as the best bullish moves are worldwide moves. Many foreign markets are still way down in the past year with U.S. markets only up a smidge.