My assessment remains that we are witnessing a colossal tug-o-war between free market price discovery and central bank interventions. The central banks are winning but each round requires much greater effort – meaning purchases of financial assets with money created out of thin air.
Today the SP500 (TSP C fund) is below its August 2018 high and the TSP S fund is 10% below its August 2018 high – distribution, distribution, distribution. Market tops take time. Secular market tops aided by central banks take longer.
Don’t be fooled by short-term pops in price due to plunging interest rates. We it comes to fixed income funds, past performance can no longer be achieved again. We are simply accelerating to the point of no returns in the US bond market.
Inquiring minds are asking why the Fed is considering an interest rate cut when the SP500 is sitting at an all-time high, unemployment is near an historical low, wage growth is solid and of course we keep hearing we are in “the greatest economy ever”.
Small caps have not bought into this last rally. Nor have some other financial sectors. At least the trade war is progressing nicely…
It is hard to get people to listen when the SP500 is near an all-time high and the US economy appears strong, so I wrote “Why I Am Defensive and You Should Be Too”. Take a look please.
So tell us Fed Chairman, with the financial markets on the verge of full melt-up based on the Fed’s money printing past and not the real economy, what are you going to do?
If bad economic news sending the stock market soaring does NOT make sense to you, then you are trying to think rationally. It makes perfect sense when you consider how distorted our monetary and fiscal policies are.
We look into key market factors to determine whether we will see 1) another continuation of the bull market, 2) a sideways pattern or 3) the start of a bear market. It’s becoming clear.