A long #MysteryBroker update overnight boils down like this: He's very skeptical a new bull market is underway, even though it looks like a long multi-month base in the S&P 500 and we got a classic October bottom/midterm tailwinds with some strong breadth.
#MysteryBroker says the market usually "doesn’t give investors a chance to get in during the first four-month thrust," meaning it typically logs a 20%+ gain; this one didn't. He's wary that this could be rerun of the strong Jan '01 and Sept '01-Jan '02 bear-market rallies.
The #MysteryBroker notes that, at those times, the bear market resumed in part because valuations were still too high and the slide in profits deepened. Also says leadership of this rally hasn't been persuasive ($XLY not up enough to suggest a new bull market, for instance.)
The #MysteryBroker notes low unemployment and lags in Fed rate hikes make the economy seem sturdy but set up recession/earnings erosion to come, cites the stats about market never having bottomed while Fed still tightening. And Fed pivots/easing not always buy signals for stocks.
The #MysteryBroker leaves open the chance that the market can break higher in the 2019 fashion (late-cycle rally after Fed throttles back, taking the S&P 500 quite-high valuations) but notes earnings were growing and rates much lower. A long shot, in other words.
The #MysteryBroker sees the backup in long-term Treasury yields as "a gift" that won't last long as inflation continues its downward path, the economy softens toward a recession and investors revise lower their projection of the Fed's terminal rate.
That's it. No elaboration beyond this thread. Requests for updates are always ignored. More context...
https://twitter.com/michaelsantoli/status/1126487466540617728
• • •
Missing some Tweet in this thread? You can try to
force a refresh
