It is graduation time, and this morning finds me swimming in a sea of fresh young faces as a young friend graduates, along with a thousand classmates. But to what?
Global central banks around the world continue to push monetary easing like never before. The Fed and Bank of Japan currently combine for almost $180bn of monthly quantitative easing, an historic experiment in monetary inflation.
The market is perhaps in the best shape it has been in over a year when looking at its trend and momentum. Perhaps the biggest development in recent weeks is the clear rotation away from defensive sectors and into cyclical sectors. This development is likely to propel the market even higher given 70% of the S&P 500 is made up of cyclical sectors. There is no erosion in either the market’s trend or momentum, and until we see erosion in the markets breadth and momentum the path of least resistance is clearly higher.
I have been arguing for several years that once China begins the adjustment process, which I expect to characterize the ten-year period of the current administration, growth rates must slow significantly. My expectation for long-term growth is that it shouldn’t average much above 3-4% annually.
The Obama administration has come out in support of the idea of exporting U.S. natural gas. This stance is counterproductive and shortsighted, and if followed, it will prove harmful to domestic manufacturing (i.e., value generation) and to future generations of Americans.
NYSE margin debt levels have risen to all-time highs. Can a stock market crash be far behind? Plus, a look at gold's technical prospects.
Pre-market sentiment is pointing towards a positive start to today’s market action, at least on the open. But stocks may struggle to sustain the momentum throughout today’s session given the lack of any economic or earnings news. That said, the market’s push into record territory has not exactly been driven by any specific data.
After a brief consolidation in March and April, industrial stocks and the transports are headed back towards their highs or higher. 3M Co, Union Pacific, Honeywell Intl, Boeing Co, Deere & Co, GATX Corp, CSX Corp, Kansas City Southern, Alaska Air, Norfolk Southern, and many other mid- and small-cap companies within the sector are touching all-time highs or breaking out.
Market manipulation is a common practice. Knowing how to spot it and avoid its pitfalls is an integral part of successful investing. We also examine today's unprecedented monetary liquidity in the context of the stock market.
As was highlighted in last week's article, the key theme since 2011 has been declining inflation and economic growth rates. Lower inflation and weak economic growth is not the environment that favors investments in commodities or commodity-sensitive currencies (CAD, AUD).