Lots of talk about the 10 year anniversary of the bull market and why! Readers of our maniacal reports know we are big believers that central banks around the globe have been doing their best to stave off bear markets. Whenever one shows up, easy money, easier money or easy money rhetoric go center stage. All one has to do is go back to Mr. Bubble himself, Ben Bernanke and go see what markets were doing before announcing more easing. We could provide a gigantic list going back 10 years but didn’t need to as we are now getting more of it at the present time.
Leave no doubt, it is not all about the central banks but when you keep rates negative, keep rates at 0% for 8 years, print (depending on which abacus you are using) upwards of $20 trillion, enable debt to grow exponentially to where $250 trillion globally is the low number…that crap goes a long way. We know! We talk about it all the time. The people of this great country and the companies of this great country do a wonderful job…but this is not just easy money. IT IS OFF THE CHARTS. We do believe recent tax cuts and regulatory cuts were a positive but remain nauseated as to what government is doing with our debt. So after 10 years of a bull market, we are being told we still need easy money. The question is whether it will continue to work.
To prove a point, here are some headlines of just the past couple of weeks…after 10 years of a bull market:
SLOW GROWTH PRODS CENTRAL BANKS- EUROPEANS REVERSE COURSE WITH STIMULUS PLANS, AS FED SIGNALS BIAS AGAINST RATE RISE.
ECB STIMULUS MARKS DRAGHI’S ACTIVISM- THE ECB ANNOUNCED NEW STIMULUS MEASURES IN RESPONSE TO DOWNGRADED FORECASTS.
ECB TO DELAY RATE HIKES TO NEXT YEAR
EURO-AREA FACTORIES SUFFER THEIR BIGGEST DROP IN ALMOST 6 YEARS
EUROPE AWAITS CHINA’S STIMULUS SIGNAL AS EXPORT ECONOMY SUFFERS
EUROPEANS FEAR A GLOBAL SLUMP
UK ECONOMY FLATLINES AHEAD OF BREXIT
AN ECB BOOST FOR BANKS GAINS CREDENCE
NEGATIVE YIELDS DEEPEN IN EUROPE
FEDERAL BUDGET DEFICIT JUMPS 77%
CHINA FEB EXPORTS TUMBLE THE MOST IN 3 YEARS, HEIGHTEN GLOBAL SLOWDOWN FEARS
CHINA FEB FACTORY ACTIVITY SHRINKS TO A 3 YEAR LOW
CHINA CUTS GROWTH TARGET
CHINA IRON ORE EXPORTS HIT 10-MONTH LOW
FED’S CLARIDA SAYS FED WILL CONSIDER NEW TOOLS TO EASE POLICY IF NEEDED, INCLUDING SOME THE FED REJECTED BEFORE LIKE CAPPING TREASURY YIELDS
22.6% OF ALL GLOBAL DEBT HAS A NEGATIVE YIELD
GERMANY IFO BUSINESS CLIMATE INDICATOR FALLS TO DEC 2014 LOWS AND BUSINESS EXPECTATIONS FALL TO NOV 2012 LOWS
THE FED’S NEXT MOVE IS TO LOWER RATES AND WILL BE MORE THAN 25 BP
20,000 JOBS CREATED
We could go on and on. We try not to be pessimists but every day, $3 billion is added to our debt while $1.5 billion of our tax dollars are going towards interest. And no one gives a crap.
Crappy day yesterday. Crappy open this morning. Jobs number not so good. Global numbers not so good.
We changed our stance on Monday and stick with that change of stance. Distribution has entered the market not only here but around the globe. We will let others tell you where things will be at the end of the year. We just want to stay with the trend. It is now near-term to the downside with the potential to worsen. While the market was rallying, earnings were not that good and while markets were rallying, most economic data points around the globe have been heading south.
The good/bad news: Central banks around the globe are easing. The ECB surprised almost everyone (didn’t surprise us) yesterday with new easing measures even though they are meaningless. The ECB still has negative rates and even though they say they have stopped, are still printing money. Next up…we all but guarantee Powell’s next move is to lower rates. The dummies at the Fed are already telegraphing it with one dude saying they are considering negative rates and more printing of money. This easy money has been good news for markets for years. The bad news is there will come a day where markets shoot a certain finger back at these easy money dolts.
More to come!
A little corrective work continues. Not a good day yesterday. especially for small and mid-caps with the a/d very poor. But it is only one day and only a few days of weakness.
We are watching the SEMIS closely as they may be in rollover mode. If they head lower, it is going to be tougher for the market…BUT…
10 years after the financial crisis the Fed dropped hints of QE4 and negative rates yesterday and the ECB announced new stimulus this morning. Fed’s Williams yesterday said they will go negative and print more money in any downturn. And he is supposedly a moderate. The ECB changed their stance this morning and said they will not be raising rates in 2019 and announced something called TLTRO (go look it up)
Futures are basically flat. We suggest sitting tight here. Markets were overdue for some sort of rest. So far, quite negligible.
Markets may be in sit mode now. This is not a bad thing. IF MARKETS ARE GOING HIGHER, sitting for a bit or (hold your breath) actually pulling back is a good thing. It works off froth, puts some doubt back into the game and elongates bases. Of course, IF MARKETS ARE GOING LOWER, we will start to see a bunch of important areas roll over. So far, just a few areas have trouble. We have mentioned areas like MANAGED CARE but other areas that are pulling back (like FINANCIALS) are just pulling back. We are seeing no real breaking down. If that changes, we will let you know. The quiet pullback has been so nominal that one good day would take care of it.
Yesterday…the good news, after reversing down hard, indices finished half way on the day’s bar. The bad news, decent reversal off the high. The good news, it’s just one day.
But it’s just one day.
Leading SOFTWARE names raided. This is to be watched. Maybe they are just pulling them in from extended conditions. Not thrilled to see leading names hit so hard.
KSS and TGT gapping up this morning on some more not so great earnings.
More fedheads around the globe calling for easier money, including one from our shop. Most economic numbers around the globe continue to be soft.
We would be thrilled to see a couple weeks of nothingness as it sets things up better. Maybe that started yesterday or maybe it was just one day.