I must admit, I enjoy poking fun at the bearish cult in the financial world. Something about “sticking to your guns” no matter what bothers me, so I reach out with a poke more than just now and then. In fact, I have a poke today, but before I do that, let’s consider the market for a moment.
- The Ukrainian battlefield successes, after a faltering start in April when government forces were humiliated, have alarmed some Western governments who fear they could box Putin dangerously into a corner with no way out to save face.
The market seems to have had an initial reaction to the news that Putin ordered the convoy to move across the Ukrainian border, even as the Ukrainian border guards were checking it out. Apparently, the Red Cross has inspected the cargo, but they chose not to escort the convoy. The agency was not given enough of a security guarantee, it said. Harsh words from President Poroshenko about Russia invading under pretext sent the market reeling, Remember that I suggested the humanitarian convoy was Putin’s way to save face.
- German Chancellor Angela Merkel will arrive tomorrow in Kiev, while Ukrainian President Petro Poroshenko said he’ll seek to negotiate a peace agreement with his Russian counterpart, Vladimir Putin, and European Union representatives next week.
So, before all this gets sorted out next week when the politicos sit down face-to-face, the convoy rolls on. It is a defiant act for humanitarian purposes, or so it has been set up. Anyway, the market has retreated a bit from the initial run into the red, but, even so, I expect it might roll back a bit today just to stay balanced.
In the meantime, the Bear Clan is reeling from a major defection. The question on the bears’ minds right now is “What just happened?”
- Stifel Nicolaus stocks strategist Barry Bannister, who had been among the most pessimistic prognosticators on the Street, threw in the towel this week on his bearish forecast. He lifted his S&P 500 year-end price target to 2300—the highest among prominent strategists–from 1850, which had been tied for the lowest.
Okay, so what did happen with one of the big chiefs of the Bear Clan? Seriously, what could have changed in his analytical world that would precipitate such a radical departure from such fervent belief? Did the charts change, the stars move, or did he simply “see the light?” Anyway, I find it quite fascinating and it makes me wonder what he saw before that he does not see now as a reason for the market’s coming demise.
My guess is has less to do with technical analysis and more to do with personal dignity. One can only go along with the crazies for so long, if one is not actually crazy.
- Looks like we dodged a huge bullet, as that scary 1929 crash chart that was all over the place back in February hasn’t played out like the bears would have hoped. It was fun to talk about, but it couldn’t have been more wrong.
See what I mean? When the above nonsense came out in February, the crazies went, well, crazy, with the chart. Even some on the talking head circuit toyed with the notion that it might be true. In any case, Barry Bannister works for rather large and successful investment firm, so …
- When we see 4% dips like we just did and a total freak out from the masses that the big dip is finally coming, that will continue to be bullish.
No, remaining on the bullish side has nothing to do with the masses freaking out or not. It is about the fundamentals and because the fundamentals are where they are, on the bullish side is the right side of the argument.
Now, add the two commodity conditions below to the fundamentals and the US consumer is looking at lower fuel and food costs. We all know about oil and gas, but do we all know that corn and soy are the most widely used ingredients in food products?
- West Texas Intermediate crude headed for a fifth weekly decline, the longest losing streak in nine months, on concern refineries will reduce demand for crude as the end of summer driving season approaches.
- Prospects of bumper harvests of [corn and soy] sent Chicago futures tumbling into bear markets last month, two years after a drought eroded output and sparked the highest prices ever.
Yup, even the drought-stricken cattle ranchers will benefit from a bumper crop in corn. Fundamentally, this is good news.
Trade in the day; invest in your life …
