Some days I sit here with so much going through my head, it is difficult to focus my thoughts about the market. For example, as I write this, the S&P 500 has strongly crossed the 1600 line and the Dow is sitting above 15,000 and I think, “What do I write about that?” given all the recent talk about a massive correction, weak hiring, weak economies, the Fed pumping, the demise of the Eurozone, and …
- Even with stocks at all-time highs, to some this feels like anything but a record-setting bull market.
- This feels like anything but a real bull market.
- This could be one the most hated/ignored moves to all-time highs in history.
- People remain dubious about the current rally amid the fragility of the U.S. economy, the uncertainty in Europe, and the worries that the Fed’s easy-money policies have been artificially propping up asset prices.
The reality is if you are dubious about the market’s lengthy move to the upside and you have been waiting for the market to tank, you have missed an opportunity to make your money work.
- The pullback that seemed so entrenched just a few weeks ago is now just a memory.
Where we go from here is less than certain, but one thing is for sure, the market will keep following the fundamentals, and as long as they keep pointing to growth, it is likely the market will follow right along. Then again, you could follow the maxim and take the rest of the year off.
- After such a huge rally, should investors “sell in May and go away”?
If you decide to sell in May, you might just miss another leg up, as the fundamentals are not getting weaker, despite the incessant drumbeat of the breathless media.
- The Nonfarm Payrolls report was well above the analysts’ expectations as 165,000 new jobs were created in April. March’s jobs total was increased by 50K while February’s jobs total was increased by 64K. The new totals show 114,000 additional new jobs. The nation’s unemployment rate fell to 7.5%, the lowest rate seen since December 2008.
So much for the post mortem on employment in the US. Hiring has been on the increase since last fall, and that reality has received very little attention, so let me give it some now.
- The economy has created an average of 208,000 jobs a month from November through April. That’s above the 138,000 added per month in the previous six months.
As to Europe, another boogey man hiding under the market’s bed, you might as well turn the lights on just to prove there is nothing there.
- Yields on Eurozone sovereign debt fell across the board in the wake of the ECB’s rate cut. Yields on French, Austrian, and Belgian bonds hit record lows as spreads against safe haven German bunds compressed in Italy and Spain.
- Despite three-and-a-half years of debt and banking turmoil, with bailouts totaling more than 400 billion euros, governments in Germany, Finland, Austria, the Netherlands and France have saved billions of euros thanks to a sharp fall in how much they pay to raise money in financial markets since their borrowing costs have dropped steeply.
The debt crisis is all but over in Europe and now, after massive budget cuts in southern Europe and Ireland that have both cut debt and ravaged the economies, Northern Europe is seeing the light – it will find stimulus money to get things going again.
As to China, the government has done a good job handling the economy there for the last three decades or so. Currently, the forces in power must feel as if the economy is not so bad and their plan to restructure the economy is working – imports are up and exports are down. I suspect this is the reason the interventionists are allowing the following to happen.
- The yuan hit an all-time record high against the dollar Thursday.
As to the Fed pumping, well, it seems that will go on for a bit more, as the US economy still has a ways to go before anyone would call it robust. But that day is coming, and the market will deal with it then, but in the meantime, ignore the offerings of the breathless media and stick with the market. It seems to know what it is doing.
Trade in the day; Invest in your life …
