Good shit, bad shit and weird shit.
The weird shit is getting weirder…
Looking at these charts, courtesy of Bloomberg (kiss kiss hug hug) one can see a definite pattern emerging.
Now in my opinion, yes everyone has an opinion and everyone has an arsehole, so make of this what you will.
Looking at Equities in the US, the S&P is going higher for the simple fact, that it is the number of investors participating in the market. These investors are not retail investors, they are large corporations (Hedge Funds, Central Banks and Wealthy Private Funds).
(Double click on charts to expand)
Now look at the underlying economic data….. All is not well in the US. Yes, in my opinion they are in a recession but look at the disconnect between the macro and the S&P…. This is again free capital seeking a safe haven. And yes of course, the fundamentals are definitely not there… It appears not to matter whether the Price/Earning ratios are apparent or not, this does not matter to those that are seeking safety.
Bonds… This is the real performance indicator, whereby this disconnect between 2 year bonds and 10 year bonds is simply a matter of the free capital anticipating an increase in interest rates by the Fed Reserve. Capital is seeking safety, other than equities (as Gentlemen prefer Bonds) and the sole purpose is to buy short term bonds is to limit the knee jerk reaction when rates increase. If you are in longer maturity bonds you do not stand a chance and you will lose monies.
The retail investors are not buying. The markets are being influenced by a smaller number of investors, meaning that this is not just any bubble in the US equities markets. This is a shift of free capital to quality, not only in the Equities, but in the short term Bond markets as well.
These market participants are, by the very nature of the rise in the markets, eliminating the investable assets for the retail investors.
This is a huge set-up whereby any correction in these markets, through the collapse of the Chinese/Hong Kong equity markets and / or the European markets, will be the trigger for participation by retail investors to buy the f&cken the dip, and pave the way for a real equity bubble.
Well not really, this has happened before, however today we have the opportunity of watching the slow motion replay.
Oh, and this is definitely not investment advice, an old sage once told me it is better to be a year early than a day late. Sit and watch, then rinse and repeat with rhythm ….
If you don’t know what I am talking about then you have not been reading these posts, it is highly recommended that you do, as a nut cruncher is coming.
BETTER TO BE SAFE THAN SORRY
Welcome to the realm of uncertainty…. believe me when I say that this gets weirder ….
If only I had that capital to invest ;0))