Loan issuance to businesses and consumers is plunging while metrics like auto delinquencies and credit card charge offs are soaring to 'great recession' levels. Of course, all this loan data continues to deteriorate as equities surge to all new highs with each passing day. So, who's right?
"Most of the money supporting ETF asset growth is coming from investors ignorant (or willfully ignorant) of risk. As with active investing, ETFs provide mostly long exposure. Unlike active investing, the higher cap-weighted indexes move beyond sustainable value, the more likely ETFs will disappoint investors."
Are retail investors buttressing US stocks at current (and elevated) levels? A variety of indicators say "Yes". Our primary concern: fund flows can be quite seasonal, with Q1-to-early Q2 a peak period due to retirement account flows. After mid-April, this diminishes considerably. Then, we will need a reliable stream of positive headlines to keep retail investors in the game.
European stocks are modestly in the green as gains in banks and oil companies offset declines in miners. Asian stocks and S&P futures rise with Emerging-market stocks extending their longest winning streak since August on the back of the 5th consecutive daily drop in the USD. The euro rose to the strongest in six weeks after a French presidential debate eased market concerns about a possible Le Pen win.
Global markets start the week mixed with Asian stocks rising (Japan was closed for holiday), European stocks sliding, weighed down by declines in oil-and-gas shares and banks, and S&P500 futures also down. The dollar fell to a six-week low, falling four days in a row for the first time since early November as G20 leaders scrap a long-standing commitment to reject all forms of trade protectionism.
The Fed tightens on Wednesday and bonds rally. What the hay? GaveKal, Jeff Gundlach, and Jim Bianco nailed it in that every spec and their mother are/were short 10-year Treasuries. But this is only a small part of the story: The global bond markets are broken. There are no signals, there is no noise. Trying to infer any sense of economic or financial information from bond yields is futile.
It’s great when a plan comes together. The recipe for the whole move since Election Day is easy. Take one part new Administration with expansive plans to boost the US economy. Add in 2 measures of a Federal Reserve confident enough in existing macro growth to boost interest rates. Add a dollop of money flows. Seems perfect, but there is one thing missing: the analysts who actually cover companies and make earnings forecasts aren’t buying it.
"One reason why the market doesn't believe the Fed dots is that investors cannot conceive of Fed tightening to the point that it causes the stockmarket any serious damage. Time and time again over both this and previous cycles the Fed has backed off rate hikes as soon as the going got tough. Maybe that is why the S&P trades at such a huge PE premium to the rest of the world."
World stock indexes surged to record highs on Thursday while the dollar traded close to a one-month low after the Federal Reserve hiked U.S. interest rates but signaled no pick-up in the pace of tightening, while the Dutch elections were broadly interpreted as a drop in support for Europe's anti-establishment powers.
While many have noticed the demise of volatility in the US equity markets - 104 days without a 1% drop, plunge in VIX, record low monthly ranges - it is the most highly speculative and most over-valued companies that appear to be the biggest beneficiaries of peak animal spirits. It has never been cheaper to hedge stocks in the Nasdaq...
European stocks declined for first session in five ahead of Wednesday's Dutch elections and Fed rate hike announcement. Fed concerns also dragged down Asian shares and S&P futures, while the dollar rose. Crude oil has ended its six-day drop. The pound tumbled 0.8% to the lowest since mid-January in a delayed reaction after Theresa May won permission to trigger the country’s departure from the EU.
European bourses advance and Asian share rose led by a surge in Hong Kong stocks which rose the most in three months as Japan hit 15 month highs. U.S. futures are little changed along while the dollar rebounded from session lows after Friday's selloff. Crude oil has continued its retreat, down 0.2% and sliding for a 6th straight day after breifly dropping below $48 in overnight trading.