I have to take issue with some of the economics I see discussed around town lately:
Seasonality was preempted by an overextended
Q4 rally; It has not been a positve lately;
Mutual fund inflows have been nonexistent; Institutional buying has been similarly missing;
Good earnings? Yes, but they are rather misleading — the
15% SPX earnings gains are disproportionately due to energy firms — back out
their gains and the S&P500 gained 10% — while respectable, its hardly
a house-o-fire, and represents a continued decrease in earnings momentum;
Non-existent inflation Um, how can I phrase
this — Wrong! Inflation is by any measure rising — commodities are in
the midst of a 2 year rally; And producers are being squeezed — they have been having a hard time raising their prices;
Lower long-term rates: The fact the long term
rates have been stable while the Fed tightens only tightens the yield curve —
and that is hardly a good thing.
Coda: I don’t think these are the reasons the market
hasn’t gone higher — I believe these are the future explanations why the lift
of the lows in late January/early February will top out (my guess? Late in Q2)
before heading South.
But that’s the longer term view — off of the levels I have been
discussing, there is likely a bounce acomin’ . . .