Best of the Week
Most Popular
1.UK General Election BBC Exit Polls Forecast Accuracy - Nadeem_Walayat
2.UK General Election 2017 Seats Final Forecast, Labour, Conservative Lib-Dem, SNP - Nadeem_Walayat
3.UK General Election 2017 Forecast: Conservative 358, Labour 212 Seats - Nadeem_Walayat
4.Theresa May to Resign, Fatal Error Was to Believe Worthless Opinion Polls! - Nadeem_Walayat
5.UK House Prices Forecast General Election 2017 Conservative Seats Result - Nadeem_Walayat
6.The Stock Market Crash of 2017 That Never Was But Could it Still Come to Pass? - Sol_Palha
7.[TRADE ALERT] Write This Gold Stock Ticker Down Now - WallStreetNation
8.UK General Election Results Map 2017 vs 2015 vs Opinion Polls - Nadeem_Walayat
9.Orphaned Poisoned Waters,Severe Chronic Water Shortage Imminent - Richard_Mills
10.How The Smart Money Is Playing The Lithium Boom - OilPrice_Com
Last 7 days
Sheffield Great Flood of 2007, 10 Years On - Unique Timeline of What Happened - 24th Jun 17
US Stock Market Correction Could be Underway - 24th Jun 17
Proof That This Economic Recovery Narrative is False - 24th Jun 17
Best Cash ISA for Soaring Inflation, Kent Reliance Illustrates the Great ISA Rip Off - 24th Jun 17
Gold Summer Doldrums - 23rd Jun 17
Hedgers Net Short the Euro, US Market Rotates; 2 Horsemen Set to Ride? - 23rd Jun 17
Nether Edge By Election Result: Labour Win Sheffield City Council Seat by 132 Votes - 23rd Jun 17
Grenfell Fire: 600 of 4000 Tower Blocks Ticking Time Bomb Death Traps! - 22nd Jun 17
Car Sales About To Go Over The Cliff - 22nd Jun 17
LOG 0.786 support in CRUDE OIL and COCOA - 22nd Jun 17
More Stock Market Fluctuations Along New Record Highs - 22nd Jun 17
Understanding true money, Pound Sterling must make another historic low, Euro and Gold outlook! - 22nd Jun 17
Green Party Could Control Sheffield City Council Balance of Power Local Election 2018 - 22nd Jun 17
Ratio Combo Charts : Hidden Clues to the Gold Market Puzzle - 22nd Jun 17
Steem Hard Forks & Now People Are Making Even More Money On Blockchain Steemit - 22nd Jun 17
4 Steps for Comparing Binary Options Providers - 22nd Jun 17
Nether Edge & Sharrow By-Election, Will Labour Lose Safe Council Seat, Sheffield? - 21st Jun 17
Stock Market SPX Making New Lows - 21st Jun 17
Your Future Wealth Depends on what You Decide to Keep and Invest in Now - 21st Jun 17
Either Bitcoin Will Fail OR Bitcoin Is A Government Invention Meant To Enslave... - 21st Jun 17
Strength in Gold and Silver Mining Stocks and Its Implications - 21st Jun 17
Inflation is No Longer in Stealth Mode - 21st Jun 17
CRUDE OIL UPDATE- “0.30 risk is cheap for changing implication!” - 20th Jun 17
Crude Oil Verifies Price Breakdown – Or Is It Something More? - 20th Jun 17
Trump Backs ISIS As He Pushes US Onto Brink of World War III With Russia - 20th Jun 17
Most Popular Auto Trading Tools for trading with Stock Markets - 20th Jun 17
GDXJ Gold Stocks Massacre: The Aftermath - 20th Jun 17
Why Walkers Crisps Pay Packet Promotion is RUBBISH! - 20th Jun 17
7 Signs You Should Add Gold To Your Portfolio Now - 19th Jun 17
US Bonds and Related Market Indicators - 19th Jun 17
Wireless Wars: The Billion Dollar Tech Boom No One Is Talking About - 19th Jun 17
Amey Playing Cat and Mouse Game with Sheffield Residents and Tree Campaigners - 19th Jun 17
Positive Stock Market Expectations, But Will Uptrend Continue? - 19th Jun 17
Gold Proprietary Cycle Indicator Remains Down - 19th Jun 17
Stock Market Higher Highs Still Likely - 18th Jun 17
The US Government Clamps Down on Ability of Americans To Purchase Bitcoin - 18th Jun 17
NDX/NAZ Continue downward pressure on the US Stock Market - 18th Jun 17
Return of the Gold Bear? - 18th Jun 17
Are Sheffield's High Rise Tower Blocks Safe? Grenfell Cladding Fire Disaster! - 18th Jun 17
Globalist Takeover Of The Internet Moves Into Overdrive - 17th Jun 17
Crazy Charging Stocks Bull Market Random Thoughts - 17th Jun 17
Reflation, Deflation and Gold - 17th Jun 17
Here’s The Case For An Upside Risk In The Global Economy - 17th Jun 17
Gold Bullish on Fed Interest Rate Hike - 16th Jun 17
Drones Upending Business Models and Reshaping Industry Landscapes - 16th Jun 17
Grenfell Tower Cladding Fire Disaster, 4,000 Ticking Time Bombs, Sheffield Council Flats Panic! - 16th Jun 17
Heating Oil Bottom Is In.(probably) - 16th Jun 17
Here’s the Investing Reason Active Funds Can’t Beat Passive Funds—and It Worries Me a Lot - 16th Jun 17
Is There Gold “Hype” and is Gold an Emotional Trade? - 16th Jun 17

Market Oracle FREE Newsletter

The MRI 3D Report

Charting the Maddening Stock Market Messages

Stock-Markets / Stock Market 2017 Mar 08, 2017 - 03:00 PM GMT

By: Gordon_T_Long

Stock-Markets

Why are we getting such diverging and maddening market messages from the equity and bond markets? Which one is right? Are either right?

Market Perceptions

Let's consider the perceptions of each of these markets:


Equity market

  • The Equity Markets perceives Trumponomic Policy SUCCESS ahead and are aggressively pricing it in!
  • The level of excitement has now reached the levels that it can safely be categorized as EUPHORIC.

NASDAQ more overbought than in 2000

S&P500 versus Price/EBITDA

Shiller CAPE

Bond Market

  • The perception of the Bond market is the REALITY of whether Trumponomic Policy will actually be implemented and within expected time frames investors mistakenly believe will happen.
  • The level of concern can be safely categorized as CAUTIOUS.

S&P5090 versus Consensus EPS

Equity to Bond Returns

Core Questions on the Table

Maybe the real underlying questions that need to be answered by thoughtful investors are the following:

  1. WHAT exactly are the details of the Trumponomic Policies? We have a lot of populist rhetoric, but as of yet we have little tangible detailed substance. The devil always lies in the details!
  2. IF in fact these policies can actually be implemented based on a clearly hostile democratic party within congress as well as significant conflict within the GOP from staunch fiscal conservative members and the Tea Party advocates.
  3. WHEN these policies can be implemented is a the major unknown? There is a congressional sequence that must be followed so that an encompassing congressional budget bill can be passed. The reinstatement on March 15th of the Fiscal Debt Ceiling is not a small hurdle to be overcome nor the creative ways the Democratic Party will do everything its power to derail and slow any implementation!
  4. RESULTS are also a major unknown. The Fiscal Stimulus, Tax Cuts and Regulatory Reduction all play well as populist policy and did work during the Reagan Administration, but will they actually work today? Many including Reagan's OMB Director, David Stockman vehemently say they won't.

Let me categorically state that in no way am I trying to be critical of the Trump Administration. I am simply, in an unbiased fashion, trying here to understand the competing views.

I would suggest that people's political bias is presently clouding their investment thinking!

S&P 500 versus Goldman Financial Conditions Index

Infastructure Forward P/E Ratio

Inflationary Pressures

To assess who is likely right we might additionally segment who we are talking about with these views.

Equity Market

We must not forget that there are two sides to the Equity Market:

THE SELL SIDE

  • Wall Street Brokerage Houses selling securities and transaction volumes,
  • Fund Managers wanting to attract more Assets Under Management (AUM),

THE BUY SIDE

  • Institutions who do their own research and are not in the habit of disclosing their investment strategies,
  • Private Funds and High Net worth Individuals who study closely metrics such as "flows", "volumes", "divergences", "macros", "Sentiment" etc. etc.

The public has visibility to the Sell Side primarily because it dominates the media in an attempt to sell its products. The Buy Side on the other hand seldom wants to disclose its investment thinking and is not typically found talking on CNBC.

My discussions with the Buy Side suggests that with respect to the equity markets, they are presently in the Bond Market camp! They point out the concerns with the global landscape that few are paying any attention to:

Global Credit Impulse

Blobal Economic Momentum set to roll over

Global Exports have Collapsed

Conclusion

Do we really need to know more to assess who is likely right?

Is it those who have unemotionally studied the situation, or those who have "faith", "believe" and are "afraid to miss out"?

Market Greed/Fear index

A proven strategy has always been in situations like this:

"Be fearful when most aren't - be bold when most are fearful"

We presently have BOTH between the Equity and Bond markets. Who you favor may make all the difference to your financial health!

S&P500nto High Yield Ratio

S&P500 Bubbles

I KNOW WHO'S SIDE I AM ON!

I have seen this rodeo once too many times!

Shiller CAPE

For more articles signup for GordonTLong.com releases of MATASII Research

Gordon T. Long
Publisher - LONGWave

Signup for notification of the next MACRO INSIGHTS

Request your FREE TWO MONTH TRIAL subscription of the Market Analytics and Technical Analysis (MATA) Report. No Obligations. No Credit Card.

Gordon T Long is not a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. Of course, he recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that you are encouraged to confirm the facts on your own before making important investment commitments. © Copyright 2013 Gordon T Long. The information herein was obtained from sources which Mr. Long believes reliable, but he does not guarantee its accuracy. None of the information, advertisements, website links, or any opinions expressed constitutes a solicitation of the purchase or sale of any securities or commodities. Please note that Mr. Long may already have invested or may from time to time invest in securities that are recommended or otherwise covered on this website. Mr. Long does not intend to disclose the extent of any current holdings or future transactions with respect to any particular security. You should consider this possibility before investing in any security based upon statements and information contained in any report, post, comment or suggestions you receive from him.

Copyright © 2010-2017 Gordon T. Long

Gordon T Long Archive

© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife