First off, my staff and I wish you a happy happy new year.
The Knicks are 5-28.
Several things stood out as muy importante to us this year.
CENTRAL BANKS- Central banks continued to maniacally print money. Leave no doubt, it was not a coincidence that when Yellen stopped the printing, Japan and Europe started. On top of that, you have the almighty China easing. And remember, we are still at 0% interest rates even though we supposedly had a 5% GDP quarter. In a normal year…way back in the normal years, fed funds would be 4% right now with 5% GDP.
INTEREST RATES- If you told me the ten year would be 2.18 and the 30 year would be 2.75 at the end of the year, I would have laughed. f you had told me Japan and Germany would have negative rates, I would have laughed. If you told me Germany/France 10-yr yields would be at all-time lows of 54 & 83 bps, I would have laughed. Nevertheless, low interest rates help…of course, if you are a saver, you continue to be screwed.
OIL PRICES- How do you say a $500 billion-750 billion tax break across the globe? How do you say $100 billion break here in the U.S? Very simply, in spite of the doomsayers saying this drop is telegraphing the end of the world, I will stick to my guns and say this is nothing but good news.
As we enter the new year, several things come to mind:
We haven’t had a bear in almost 6 years.
We haven’t had a good correction in a few years.
Bullishness is rampant.
Biotechs with no sales are announcing anything and tripling in price overnight. Over 120 Biotech names with no sales have come public during the past 2-3 years with the number ramped up in past year.
Let’s just say we are overdue…way overdue…but that does not mean market has to get in trouble. There is no doubt in my mind that Central banks around the globe are underpinning asset prices with a put by printing money and keeping rates at 0% with the printed money. This has always led to bubbles…which has always led to pops of those bubbles. But every now and then, you get major climactic runs before the bubble bursts. Just think internet in 99 and housing in the mid-2000s. This time? We will be watching.