One of the most incisive thinkers in the investment field is David Fuller who runs the Fullermoney service from London, providing daily written and podcast commentary. I have been subscribing to the service for more than 20 years and consider it part of my staple investment diet, particularly also for its truly global approach. I am not an agent for David, but please stop by his site to get a feel for his excellent commentary.

The paragraphs below are from Monday’s Fullermoney report are particularly topical at this juncture in stock markets.

Veteran subscribers will recall a remark often used on this site: Bull markets do not die of old age – to which I will add, or warnings by Roubiniesque economists. Instead, they are assassinated – usually by central banks.

“So how many rate bullets does it take to fell a bull?

“You may not be surprised to hear that there is no precise answer, because it depends mainly on sentiment and liquidity. We know when central banks start to reduce liquidity, or at least increase its price, but we do not know precisely when that will affect sentiment adversely.

“We know that a few central banks have commenced an incremental tightening of rates. However we cannot know how aggressively they will act or when other central banks will follow their lead, because they do not know themselves.

“Recently, some big guns from the investment management and hedge fund industry concluded that stock markets were ripe for a correction. I was of a similar view. However, markets seldom dance to countertrend tunes for long, and with but a few exceptions, we have seen little more than slightly larger reactions and more sideways ranging recently.

“The DJIA’s new recovery high today [Monday] is not exactly the stuff of corrections, unless it is instantly and dramatically reversed. Meanwhile, I would back the bull trend. After all, we have seen some mean reversion recently, narrowing overextensions relative to 200-day moving averages. There is also the not insignificant matter of the biggest monetary reflation in human history, and there is no hyperbole in that description.

“Stock market indices would have to break beneath their most recent reaction lows to question further the overall outlook for sideways to higher ranging.

“Meanwhile, note also the still widening spread between US 10yr Yields over 2yr Yields, otherwise known as the Yield Curve, on this historic chart. It is still rising, indicating to me that quantitative easing continues. The time to start thinking about closing long portfolios in anticipation of the next bear market, I suggest, will be when the Yield Curve next inverts by moving below zero. However the lead was so early last time (early 2006) that some of us became complacent about it.”


Source:, November 10, 2009.

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