Some market huh? The crosscurrents and conflicting data
points are sure making it hard for many traders to get a handle on this beast.
My perspective has been simple: The markets’ prior trading
range has failed, as the reality of slower growth and higher inflation have
come to be accepted by Fund Managers. They think long term, and must be close
to fully invested most of the time. That makes them slower on the uptake than
their hedge fund buddies. (See these charts)
I also took a closer look at Friday’s Non-Farm Payroll
numbers, and found there is less “there” there than appeared at first blush.
– ETA measures show far less job creation than BLS (both are
part of DoL)
– 275,000 suggests a GDP closer to 5-6% than 3-4%; That’s
inconsistent with other data we are tracking
– The April NFP data contains an unusually large big Birth/Death
adjustment (+252k), similar to what we saw last April. While its foolhardy to
mix seasonally and nonseasonally adjusted numbers, its still a significant
factor and may have overstated new job creation
All that said, I think there is an excellent buying juncture
coming up soon: While a lot of
commentators have talked about how “old” this cyclical Bull market is, I
suspect she has more life left in her. To me, this market looks – right here
– as being parallel to the time between the 3rd & 4th
Quarters in a football game. So in my opinion, there’s its not over by any stretch
of the imagination.
But that doesn’t mean you should pay up or buy into this
mess. Indeed, it appears the bulls are expending a lot of ammo lately merely running in place. As such, I am looking for a cheaper, more oversold market to get
aggressively long for the next major leg up. And that means staying with my
earlier time targets of late June/early July to do so.
Watch this space for my impression of when we are so ugly as to be beautiful!
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Great blog.
But for my 1st comment, I just had to tweak your nose about this metaphorical mess:
>it appears the bulls are expending a lot of ammo lately merely running in place.
Since they are not actually moving, could more ammo easily be delivered if necessary? Do they actually have separate guns, adapted to hoof operation, or do is the firing mechanism part of the implied treadmill, where they simply have to run in order to activate the guns? Who armed them, and does anybody think it was a good idea?
I’m too busy turning the grindstone of corporate America to watch Kudlow’s CNBC show, but I see from his blog that you’re on the guest list and his bullishness is going to Pound You Senseless.
Wow Barry you hit the big time, Muckdog has graced you with a comment. (snark)
Good luck on Kudlow. I never watch him since he makes me want to vomit.
From a fundamental view the key point is when the Fed quits tightening. It was starting to look like that could be soon, but with signs of both stronger growth and stronger inflation my confidence in that is taking a big hit.
I’d look for accelerated rate hikes to pre-empt stagflation.