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.
The S&P 500 declined by 0.37% and the Dow was off by 0.15%. The S&P declined for the first time since May 1st. Rumors about a Fed announcement of when QE efforts would end led to a fairly soft sell off late in today’s trading. The market rallied slightly and closed off its lows. Homebuilders, semiconductors, and media were the best performers today and telecom, utilities, and transports lagged the market.
Jeffrey Saut, Chief Investment Strategist at Raymond James, tells investors on the Financial Sense Newshour that today’s market is “record setting,” experiencing what he says is the longest “buying stampede” in market history.
This extraordinary stock market is driven by characteristics that defy conventional valuation techniques. I receive emails from people who tell me that the market is overextended, overvalued, and trading way above its 50- or 200-day moving average. If you look at the metrics, the market is all of those things.
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).
While the stance of monetary policy around the world has, on any conceivable measure, been extreme, by which I mean unprecedentedly accommodative, the question of whether such a policy is indeed sensible and rationale has not been asked much of late.