DIC 11 16
SIT EC y POL
ZERO HEDGE
ECONOMICS
"...we’re
still dealing with the same picture, overvaluation on a very grand scale...”
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It's Beginning To Look A Lot Like... 1999!
Caveat
Emptor!
Review & Dow 20,000
This past week, the market advanced 3% heading towards my target of
2400. The Dow broke above 19700 and is
within striking distance of the “psychological” summit of 20,000.
It’s Beginning To Look A Lot
Like…1999!
It is interesting to
watch the excitement build around the market once again as we head into the New
Year. There is an optimism rising the “new bull market” has finally
arrived and we are set to start an unprecedented advance as the calendar turns.
Take a look:
- Dow 20,000 And Beyond – Mark DeCambre
- 3-Reasons The Trump Rally Will Continue – Stephen Gandel
- Reasons Why Stocks Are In “Melt-Up” Mode – Adam Shell
- Rising Rates Good For Stocks – Lee Jackson
- Rising Yields Signal Economic Growth – Peter Ireland
- Rising Yields A Bullish Signal – James Picerno
You get the idea.
And, as I showed last weekend, investor confidence is extremely high
levels as well. But here is the latest from NAAIM which shows managers at a net
101% exposure. SEE
IMAGE AT: http://realinvestmentadvice.com/wp-content/uploads/2016/12/NAAIM-Exposure.jpg
See, it’s all good….for now.
If this market rally
seems eerily familiar, it’s because it is. If fact, the backdrop of the rally reminds me much of what was happening
in 1999.
1999
- Fed was hiking rates as worries about inflationary pressures were present.
- Economic growth was improving
- Interest and inflation were rising
- Earnings were rising through the use of “new metrics,” share buybacks and an M&A spree. (Who can forget the market greats of Enron, Worldcom & Global Crossing)
- Stock market was beginning to go parabolic as exuberance exploded in a “can’t lose market.”
If you were around then, you will
remember. The charts below show a comparison of GDP, Inflation,
Interest Rates (10-year) and the S&P 500 between 1998-2002
(dashed lines) and 2014-Present (solid lines). The data is nominal and quarterly.
While inflation rates and GDP growth are substantially weaker
than in 1998, the recent turn higher is similar to what we saw during
that previous period. Notice
in 2000, there was a spike higher in GDP which got the bulls all excited just
before the recession took hold. SEE
IMAGE AT: http://realinvestmentadvice.com/wp-content/uploads/2016/12/GDP-Inflation-98.png
The same is true for interest
rates which rose about 1.5% between 1998 and 2000. Rates then resumed their long-term
downtrend in conjunction with the onset of a recession. SEE CHART AT: http://realinvestmentadvice.com/wp-content/uploads/2016/12/GDP-InterestRates-98.png
Of course, as rates, inflation, and economic growth were
rising by small amounts, investors
pushed assets prices higher expecting the longest economic growth cycle on
record to continue for another decade. SEE CHART AT: http://realinvestmentadvice.com/wp-content/uploads/2016/12/GDP-SP500-98-2.png
It didn’t.
The last chart gives
a better comparison. I have combined interest rates, GDP, and inflation into
a single “economic index” for both the 5-year period beginning in 1998
and 2014 to present. I then recalibrated the
2014 index and market to 1998 levels.
This is where it
gets interesting. If you look at the chart you would quickly make the argument
that we have 8-10 quarters ahead of us before a problem occurs. However, because we are running at HALF of the previous rate,
there is substantially less room to fall before a recession sets in. In other words, in 1998, the economy had to decline from
a 7.5% growth rate to hit recessionary levels. SEE CHART AT: http://realinvestmentadvice.com/wp-content/uploads/2016/12/Economic-Gauge-SP500-98Scale-1.png
Considering we are at 2% today,
the time to recession will be considerably shorter – like 2-4 quarters kind of
short.
For the skeptics, here is the actual data graphed from
1997-2014. Stocks entered the melt-up phase as the “Bullish Mantra” changed from:
Lower
rates and lower inflation is good for stocks
To:
Higher
rates and higher inflation is good for stocks
SEE ALL THE CHARTS COMING AT THIS
WEB SITE: http://www.zerohedge.com/news/2016-12-11/its-beginning-look-lot-1999
[[FINAL REMARK: ]]
For those long
energy-related equities, this is likely a good time
to take in profits and rebalance exposure during short-term corrections.
However, the bigger
picture is that while long-exposure remains recommended currently, it is also
critically important not become overly complacent. Just
because the lights are still on and the music “still a pumpin'”, smarter
investors tend to quietly exit before the cops show up.
Just don’t forget to turn off the lights if you are the
last to leave.
…
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Hedge funds have performed rather poorly
returning only 0.9% overall in November according to JPM. The reason: "hedge funds did not have enough beta to the
Trump trade, i.e. the Trump trade is underowned."
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POLITICS
The "it's-not-our-fault,
Russia-is-to-blame-for-Trump" narrative is escalating amid Sunday
political talk shows with Democratic Senator Claire McCaskill spewing that any attempt by Russia to meddle in the
United States presidential election should be seen as "a form of
warfare."
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"I have watched incredulous as the
CIA’s blatant lie has grown and grown as a media story – blatant because the CIA has made no attempt
whatsoever to substantiate it. There is no Russian involvement in
the leaks of emails showing Clinton’s corruption. As Julian Assange has made crystal clear, the
leaks did not come from the Russians. As I have explained
countless times, they are not hacks, they are insider
leaks – there is a major difference between the two."
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El coronel Donald si tiene quien le
escriba: una Juez
"Move over Hillary, Harry, Jill, and all you namby pamby pathetic losers still
crying in your grande double shot skinny lattes... don't be fooled by
these narratives... it's all part of an
orchestrated effort to build a wall to prevent Donald Trump from making
America great again..."
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WORLD ISSUES and ME
Despite Saudi Arabia pumping record amounts of crude, the energy complex has spiked 6%
higher tonight after two major headlines. First, Russia and other non-OPEC
nations agreed to join the OPEC pledge to reduce production; and then, in what
some are calling their "whatever it takes" moment, Saudi Arabia surprised the market by saying
it will cut more than previously agreed.
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HERE THE PROVE THAT HIS IS A NEOFITE IN GEO-POLITICS
"I
fully understand the 'one China' policy, but I don't know why we have to be
bound by a 'one China' policy unless we make a deal with China having to do with other things, including trade. We're being hurt very badly by China with
devaluation, with taxing us heavy at the borders when we don't tax them, with
building a massive fortress in the middle of the South China Sea."
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FAILED NEOCON
AMBASSADOR WANT TO TELL US WHAT TO READ.. Ridiculous!
"We know that
Russian-government-controlled ‘media’ outlets such as RT and Sputnik campaigned openly for one candidate, Donald Trump.
We have laws preventing foreign governments from contributing financial
support to candidates. Should
we have similar laws about in-kind support?
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Speaking to Fox News' Chris Wallace on Sunday morning, the
President-elect blasted the Friday night Wapo
report that a secret CIA assessment concluded Russia intervened in the U.S.
presidential election to help him win the presidency. "I think it's ridiculous. I think it's just
another excuse. I don't believe it."
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GLOBAL RESEARCH
Syrian
Army Takes Control of 93% of Aleppo’s Territory. Ceasefires Agreements Signed.
Russia’s General Staff By ITAR-TASS
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Has
the US and Its Allies Used Covert Airdrops, Drones to Supply the Islamic State? By Ulson Gunnar,
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INFORMATION CLEARING HOUSE
Independent
journalist Eva Bartlett sets a smug reporter straight during a UN Syria Mission
press conference
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Barack Obama’s White
House is in damage control mode. It’s about time they admit it’s game over.
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Liberman penned an
article to explain his regime's struggles in a trobulant Middle Ease
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Trump says CIA charge
Russia influenced election is 'ridiculous'.
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Fake News are
typically accompanied by calls for “solutions” that involve censorship and
suppression.
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“He that always give way to others, will end in having no
principles of his own” Aesop
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SPUTNIK and RT SHOWS
Syrian Army Evacuates 80% of Palmyra Residents, Rest in
Danger - Homs Governor https://sputniknews.com/middleeast/201612111048437428-syrian-army-palmyra-residents/
RELATED:
1-Daesh Moves Reserves to Palmyra Thanks to Pause in
US-Controlled Raqqa Offensive
https://sputniknews.com/middleeast/201612111048427531-daesh-palmyra-raqqa-us-russia/
https://sputniknews.com/middleeast/201612111048427531-daesh-palmyra-raqqa-us-russia/
Daesh Moves 5,000 Terrorists to Raqqa, from
Iraqi Mosul – Aceptar la “Reconciliation” del US fue un error RU. La comunidad
internacional pide eliminar estos terroristas ya. Esos caníbales asesinaron
muchos miles de gente y destruyeron totalmente Syria. Es ahora o nunca. Basta
de terrorismo!
..
2-According to US reports “the deal will have
militants from the Nusra Front terror group (outlawed in Russia)
brought to the Idlib province” if unarmed. But they go beyond Idlib Prov and
now they are re-armed by the US. See: US-Russian Aleppo
Evacuation Proposal Says Nusra Terrorists Can Only Go to Idlib https://sputniknews.com/middleeast/201612111048434354-us-russia-aleppo-evacuation/
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Claim That US Election Could Be Hacked Just 'Headline-Grabbing Media Invention'
https://sputniknews.com/us/201612111048435573-us-hacking-review-commentary/
Claim That US Election Could Be Hacked Just 'Headline-Grabbing Media Invention'
https://sputniknews.com/us/201612111048435573-us-hacking-review-commentary/
Related : Fox News Host Destroys Democratic Lawmaker Over Russian
Hacking Claims https://sputniknews.com/us/201612091048340762-tucker-carlson-russian-hacking-claims/
Video URL: https://youtu.be/TqKkWFYL7FY
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RT SHOWS
RT SHOWS
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NOTICIAS IN SPANISH
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No será el fin de la guerra sino el comienzo de
un nuevo Cap
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Siria, ent a Joseph Daher El mov nacional kurdo en Siria:
objetivos políticos, controversias y dinámicas
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Fue lo que los Chinos le dijeron a Trump cuando
este apoyo Taiwán
El caso es que si Trump pierde a China ninguno
de sus proyectos geo-pol funcionara
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Iran Makes Historic
$16.6 Billion Deal With Boeing. Pero -al parecer- puede ser cancelado
si el US Senado entorpece relación US-Iran to favor Israel wars on Syria-Iran.
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Trump explica por qué su gabinete lo
conforman multimillonarios is not greed glutony?
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Algunos desconfían y consideran que hay que
alinearlo a bombazos. Acaso la CIA-Mossad?
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PRESS TV
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US concerned about Turkey attacks on Kurds
in fight for Raqqah
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Obama making up for Dems ‘staggering loss’ in 2016 Vote
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Syria should take
them out from their country not matter what
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‘US,
allies, fueling wave of terror in middle east
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'May speaking in interest of US, Israel' rather than UK
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OPEC,
non-OPEC producers set for deal to reduce oil output
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