Best of the Week
Most Popular
1.What Happened to the Stock Market Crash Experts Were Predicting - Sol_Palha
2.London Housing Market Property Bubble Vulnerable To Crash - GoldCore
3.The Plan to Control ALL Your Money is Now at Advanced Stage
4.Why Gold Is Set For An Epic Rally This Spring - James Burgess
5.MR ROBOT NHS Cyber Attack Hack - Why Israel, NSA, CIA and GCHQ are Culpable - Nadeem_Walayat
6.Emmanuel Macron and Banking Elite Win French Presidential Election 2017 - Nadeem_Walayat
7.Trend Lines Met, Technical's are Set - US Dollar is Ready to Rally (Elliott Wave Analysis) - Enda_Glynn
8.The Student Debt Servitude Sham - Gordon_T_Long
9.Czar Trump Fires Comey, Terminates Deep State FBI, CIA Director Next? - Nadeem_Walayat
10.UK Local Elections 2017 - Labour Blood Bath, UKIP Death, Tory June 8th Landslide - Nadeem_Walayat
Last 7 days
The Stock Market Will Tank Hard - 24th May 17
It’s Better to Buy Gold & Silver When It DOESN’T Feel Good - 24th May 17
Global Warming - Saving Us From Us - 24th May 17
Stock Market Forecast for Next 3 Months - Video - 23rd May 17
Shale Oil & Gas Production Costs Spiral Higher As Monstrous Decline Rates Eat Into Cash Flows - 23rd May 17
The Only Metal Trump Wants More Than Gold - 23rd May 17
America's Southern Heritage is a Threat to the Deep State - 23rd May 17
Manchester Bombing - ISIS Islamic Terrorist Attack Attempt to Influence BrExit Election - 23rd May 17
What an America First Trade Policy Could Mean for the US Dollar - 22nd May 17
Gold and Sillver Markets - Silver Price Sharp Selloff - 22nd May - 22nd May 17
Stock Market Volatile C-Wave - 22nd May 17
Stock Market Trend Forecast and Fear Trading - 22nd May 17
US Dollar Cycle : Deep Dive - 21st May 17
Bitcoin Breaks the $2,000 Mark as Cryptocurrencies Continue to Explode Higher - 21st May 17
Stocks, Commodities and Gold Multi-Market Status - 21st May 17
Stock Market Day Trading Strategies and Brief 20th May 2017 - 21st May 17
DOW Needs to Rally Big or Correction is Next - 20th May 17
EURUSD reaches DO or DIE moment! - 20th May 17
How to Get FREE Walkers Crisps Multi-packs! £5 to £28k Pay Packet Promo - 20th May 17
UK BrExit General Election 2017 - Will Opinion Pollsters Finally Get it Right? - 19th May 17
Gold Mining Junior Stocks GDXJ 2017 Fundamentals - 19th May 17
If China Can Fund Infrastructure With Its Own Credit, So Can We - 19th May 17
Evidence That Stocks are More Overvalued than Ever - 19th May 17
Obamacare May Become Zombiecare In 2018 - 19th May 17
The End of Reflation? Implications for Gold - 19th May 17
Gold and Silver Trading Alert: New Important Technical Development - 19th May 17
Subversion And Constructive Synthesis Of Capitalism And Socialism - 18th May 17
Silver: Train Leaving Station Soon! - 18th May 17
Credit and Volatility Signal That Financial Conditions Are Very Overheated - 18th May 17
Another Stock Market "Minsky Moment" or Will the Markets Calm Down? - 18th May 17
WannaCry Ransomware Virus Is a Globalist False Flag Attack On Bitcoin - 18th May 17
Euro, Stocks, Gold Momentum Extremes All Round! - 18th May 17
US Stock Market Slumps on Establishment / CIA Trump Impeachment Coup Plan - 18th May 17
Tory Landslide, Labour Bloodbath - Will Opinion Pollsters Finally Get a UK Election Right? - 17th May 17
The stock market sectors which are breaking out in 2017 - 17th May 17
A ‘Must-See’ Chart for Gold and Silver Aficionados  - 17th May 17
Will the SPX Stock Market Final Surge Fail to Appear? - 16th May 17
Claim your FREE copy of Jim Rickards’ explosive book - 16th May 17
GOP Establishment Elite Plots Trump Removal - 16th May 17
Walkers Crisps Pay Packet Cheats, Shoplifters and Staff Conning Customers - 16th May 17

Market Oracle FREE Newsletter

Trading Commodity Markets

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

© 2005-2016 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