Friday, June 20, 2014

Permabull Market

Another new all time high hit this morning in the S&P.  Another day, another ATH.  It isn't easy to make money for us non-permabulls.  I have tried to grind out some gains with Treasuries but that hasn't really been working.  And thankfully, I have not tried to short this beast.

The new scare now is inflation, especially the bond market.  With CPI coming in at above 2% annual, all of a sudden, we have to fear inflation.  Philly Fed price component was also up strong.  When inflation is a concern, the CPI becomes like the release of the NFP report.  Now the market will be anxious about the CPI, more so than the NFP.

That is why you are seeing a huge rally in gold, because of these inflation fears, with an easy Fed, not Iraq.  Gold is still in a bear market and I don't see any sustained uptrend here.

At some point in the next couple of weeks, we'll top out, but timing it is difficult.  With no easy setups and low volatility, you have a really tough trading market.


Anonymous said...

There has been intense talking of possibility of new low natural interest rate regime for the next few years. But this idea is essentially initiated after the economy slow down in 1Q; a reaction instead of a far-sighted prediction. I wonder how these people can confidently form such multi-year macro view?

Market Owl said...

A new low long term interest rate is not some amazing idea. It is a pretty easy prediction to make. Just look at Japan , and you will see that once you start QE, it is impossible to go back to a normal interest rate environment.

I agree with them that we are stuck at low rates forever..