THE MARKET

Since the Fed launched “NOT QE” on October 11, everything has changed. We alerted you that all the comatose areas of the market had woken up. Small and mid caps. Transports. Foreign markets. Low beta. Cyclicals. Companies with down earnings and poor guidance are moving into new high ground. All got their cue and all are on the move. To the day, again, things got going. Wall Street’s default setting of just buying the easier money lit up again. But not being reported is just how much Powell is printing. The Fed is now on a run rate of over $1.5 trillion on an annual basis. This makes Ben Bernanke look like Paul Volcker. Think about this. Jay Powell is now printing more money than Bernanke but when Bernanke went easy as all heck, the unemployment rate was north of 9% and the world was experiencing a financial meltdown.
Think about this:
1) Major indices have been strong all year.
2) Unemployment rate in the mid 3s…not in the 9s.
3) 123 months of economic expansion, longest in history.
4) 108 months of job growth, longest in history.
Yet the Fed cuts rates 3 times and is now breaking Bernanke’s records, providing liquidity in unprecedented numbers.So when you hear pundits tell you the market is moving higher because of fundamentals, read this report to them. You can thank one man with his “NOT QE” nonsense. Actually, more than one. Along with the ECB, who started up their QE again after promising not to and just 10 months after the last QE program ended, who knows where this market could go. Just realize that if earnings stay flat to down, it will all be on valuation expansion. And oh…don’t worry about the $250 trillion of global debt that all of this easy money has enabled. DC isn’t worried about it and they know better. (cough)
Cash is high and with all the impeachment talk, trade talk and recession talk, sentiment is very bearish. Major indices have either broken out of range or are a stone’s throw away. Areas of the market that had been comatose have now woken up. Foreign countries that are in recession are actually near new high ground. (not kidding) The new yearly high list is now expanding with a bunch of low beta, cyclical-types where both earnings and sales are down year over year. (not kidding and amazingly, most growth names remain bearish) November and December are usually months of seasonal strength. The president finally took advice from a few smart people that he had to end the China nonsense as he heads into the election year. (Expect a truce sold as the greatest deal ever!) As always, we will let price dictate but leave no doubt, our theme from a few weeks back about the potential for the market to get going because of the new round of QE is at hand and is on the move. As always, if things change, we will let you know. We are just amazed that after more than 10 years, markets are still reacting to the moves of these few select people running central banks into the ground.