Last month, an unlikely pair of senators – Sherrod Brown, an Ohio Democrat, and David Vitter, a Louisiana Republican – introduced a non-binding resolution calling for the end of the implicit subsidies that “too big to fail” (TBTF) banks enjoy.
Before taking even one step further, I’ll tell you right up front that this is more of a “for fun” discussion than not. For many a moon I have followed a number of sentiment surveys that I believe can be quite helpful.
The elusive bottom in Chinese stocks is becoming more constructive here with a higher low being put in, above the 200-day moving average. MACD signaled a buy in May and is moving into positive trend territory on the daily chart.
Tepper stokes the melt-up. “I am definitely bullish. The budget deficit is shrinking massively. Guys who are short, they better have a shovel to get out of the grave.” Hedge fund manager David Tepper, CNBC, May 14, 2013
Based on both recent history and mainstream economic theory the past few years should not have been possible. When you cut interest rates to near-zero, run deficits of 10% of GDP and buy up every government bond in sight with newly created currency, you get a boom, end of story. That’s just the way capitalism works.
They aren't currency wars, they're "currency tensions." -Mohamed El-Erian. Either way, Japan is ruffling a lot of feathers as it exports deflation.
While we tend to focus more on the short and intermediate term, we notice that there is a lot going on in the long term time frame. Most obvious is the breakout above the top of a long-term trading range.
The April jobs report on May 3rd sparked a renewal of something I’m calling the "Taper Trade." As I mentioned last week, the effect of renewed faith in U.S. cyclical stocks post-Q2 earnings, along with a rise in the ECRI’s leading economic indicator, better housing data, and this jobs data has been a shift in investor sentiment back towards growth, and away from defensive tactical weightings in Treasuries, the dollar, healthcare, and utilities.
The Fed justified a previous round of quantitative easing "to promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate".
Leading indicators for the labor market suggest we get an acceleration in payroll gains heading into the fall, which is what the market may be discounting currently as it continues to hit new all-time highs. With the market’s long-term momentum continuing to improve and the outlook for employment encouraging, the risks of a recession and/or bear market appear remote with the market likely heading to new all-time highs into the fall.
FS Newshour Q-Line
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