Why is SPY holding at near-record highs with demand driving bond yields down and gold soaring?

[Nobert]

What specific event (or events) "this time," will be the catalyst for a Bear Market?

The potential catalyst, sparks curiosity,

yet i am more interested, in how, the following things will play out :
(once that happens)

* Student Debt
* Pensions of Baby Boomer's
* Honk Kong
* Italy
* Deutsche Bank - more surprises (?)
* Who ain't gona get, the bail out this time
* Australia's real estate
* TSLA (luxury car market, gets effected first)
* Are we going to see, another.... Let's Occupy the Wall Street (? ;D )

 

[dozu888]

The potential catalyst, sparks curiosity,

yet i am more interested, in how, the following things will play out :
(once that happens)

* Student Debt
* Pensions of Baby Boomer's
* Honk Kong
* Italy
* Deutsche Bank - more surprises (?)
* Who ain't gona get, the bail out this time
* Australia's real estate
* TSLA (luxury car market, gets effected first)
* Are we going to see, another.... Let's Occupy the Wall Street (? ;D )

the wall of worry has to be made up with worries... and basically this book points out the fundamental principle in the stock market - the less information risk you take, the more price risk you take.

think about this one for a minute.

lol.

 

[maxinger]

The more we try to understand,
the more we try to reason out the correlation between SPY and bond and gold,
the more money we are going to lose and
the more opportunity we are going to miss.


This is how I analyse things.
SPY, GOLD, bonds have been moving for the past few days.
So it will continue to move till the charts say no.

 

[bone]

The more we try to understand,
the more we try to reason out the correlation between SPY and bond and gold,
the more money we are going to lose and
the more opportunity we are going to miss.


This is how I analyse things.
SPY, GOLD, bonds have been moving for the past few days.
So it will continue to move till the charts say no.

The “flight to quality” as it were has been fleeting. The fact that the US is the worlds largest oil producer is a geopolitical game changer of seismic proportions. It’s telling that Iranian shenanigans and a full fledged trade war with a China hasn’t taken the bid out of equities. It’s going to take a string of missed earnings to bring on a Bear market.

 

[ironchef]

Here is the million dollar question for all you knowledgeable gentlemen:
"What chain of events will it take to turn this 10 year Bull Market into a Bear Market?"

Elizabeth Warren wins the 2020 Presidential election.

 

[ironchef]

Elizabeth Warren wins the 2020 Presidential election.

Until then, I am with @dozu888, net long all the way.

 

[bone]

$13 Trillion in Government Sovereign Debt is trading at negative interest rates according to Bloomberg. As a side note, no central bank will sell you a negative interest bearing instrument - they are purchased on the secondary dealer market.

 

[Specterx]

The trade war is the most likely catalyst for a downturn - and it's a pretty good one, since it seems clear that the USA-China conflict will endure and not just be resolved overnight with an announcement.

Otherwise, look at the ongoing growth in passive investment vehicles, the huge explosion in SWF assets from <$1trn fifteen years ago to at least $7.5trn today, and the increasing concentration of the world's wealth into the pro-managed family offices of a few billionaires. These market players hold for the long term, allocate via systematic methods, change allocations only very slowly, and supply a constant bid for shares from new contributions and recycling of income.

This is a recipe for what we've seen for a decade, i.e. a steady grind up punctuated by occasional washouts of trend-followers, crowded quant strats, and individual sectors.

It's possible that U.S. stocks specifically could go out of fashion and just chop sideways for years or decades, but that's unlikely unless (until) the silicon valley unicorn tech-disruption macro story is decisively crucified.

 

[bone]

The trade war is the most likely catalyst for a downturn - and it's a pretty good one, since it seems clear that the USA-China conflict will endure and not just be resolved overnight with an announcement.

Otherwise, look at the ongoing growth in passive investment vehicles, the huge explosion in SWF assets from <$1trn fifteen years ago to at least $7.5trn today, and the increasing concentration of the world's wealth into the pro-managed family offices of a few billionaires. These market players hold for the long term, allocate via systematic methods, change allocations only very slowly, and supply a constant bid for shares from new contributions and recycling of income.

This is a recipe for what we've seen for a decade, i.e. a steady grind up punctuated by occasional washouts of trend-followers, crowded quant strats, and individual sectors.

It's possible that U.S. stocks specifically could go out of fashion and just chop sideways for years or decades, but that's unlikely unless (until) the silicon valley unicorn tech-disruption macro story is decisively crucified.

If the trade war devolves into a string of missed earnings you are indeed correct that it would usher in a Bear market. I find it telling that we are making new highs in the early throes of a full on trade war with China. Companies with heavy Chinese exposure are making very public pronouncements about the steps they are taking to secure supply production with the new reality. It is apparent to any CEO that they have to diversify their low cost manufacturing pipelines.

 

[nattybumppo]

Fed has not yet reversed its tightening cycle, just jawboned a lot. Reason bonds and gold are rising while defensive stocks outperform is flight to safety. US stocks are not falling yet, but have been stuck in a trading range for 18 months even though debt-financed corporate stock buy-backs have continued. Never mind those tiny new highs in SPX--no new highs at all in the broader NYA. That could change, but it would probably require a big injection of new liquidity.

Big (presumably "smart") money investors have been selling against stock market rises for quite a while now. Their positions are so big that they must scale out gradually if they are to get out at good prices. Their lack of confidence should tell us something, but small retail investors can better exploit liquidity and so can get in and out faster than big money investors who must plan with longer time horizons.

Bear markets usually start about 18 to 24 months, or sometimes a little longer, after the initial 3/10 yield curve inversion. If history is a guide, then I expect the next recession to begin 12 to 18 months from now, or possibly a little longer; UNLESS there is a huge spike in oil prices, which could rapidly accelerate the onset of recession, as in 1974 and 1981. Big economies roll over slowly, perhaps more slowly if powers that be fight the rollover pre-emptively.

You never know for sure what the trigger will be, but for many decades the trigger in the US has almost (I said "almost") always been a spike in oil prices. US had edged out SA and Russia as number 1 producer for now, but we have high cost-of-production oil with low EROI, and so light that our refineries must blend it with heavier (imported) oil to make fuel. Oil prices are set in a global market, so a disruption anywhere in the global supply chain will spike prices for everyone. Trump surely knows this, so I do not expect a war with Iran before the election, and hopefully not ever--or at least not a land war. Iraq would look like a walk in the park by comparison.

High debt, and especially high consumer debt, always sets the economy up for a crash, but usually the trigger is something else. The business cycle is an inbuilt feature of credit driven economies. Whenever old debt begins to be liquidated faster than new debt is incurred, the economy must either slow or contract. Any financial development that elicits a return to fiscal prudence will trigger another recession, and the stock market is extremely good at anticipating those recessions several months in advance--unless the Fed intervenes with an unprecedented level of pre-emptive liquidity, in which case all bets are off--but I would not bet on this. We may indeed get a symbolic rate cut to buoy investors' animal spirits, but I think Powell is essentially pulling a "Mario Draghi" on the markets while delaying a true easing cycle for as long as possible.