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

kmiklas

kmiklas

This market doesn’t make sense to me.

- The 10T dropped below 2% today.
- Money is flowing into gold
- No Fed rate cut yesterday
- Inverted yield curve

Yet the S&P is hovering at near record highs!!!

The above factors should drive the equities markets down as money flows into fixed income, gold, and the like.

I can see where traders might not respond to Señor T’s antics (trade war, tech antitrust, military bluffs, reactionary tweets, etc.) but these are pretty fundamental indicators.

Can anyone shed any light? Where is this liquidity coming from? Maybe the crypto market is “raising all boats.” :D

Thx, Keith :confused:
 
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here is what's going on.

yes investors chasing yields... desperately.. they go to their financial advisers, who then tell them diversification is key... ignoring the fact that it's simply stupid to buy bonds now... but the advisers just want to keep their jobs... so just do what everyone else is doing.

now you've got 10 year at 2%, LQD at 3.5%... and companies are like...hey if I just issue paper at 3.5, and buy back stocks forward yielding 6%, it's a free 2.5%... it's like picking up free money from the floor.

3 years ago I had a thread called 'are we gonna run out of shares'.... it's such a simple situation, yet people are too blind to see it.... SP should be at 5000 right now, and will still look cheap compared to bonds.
 
dozu888 said:
here is what's going on.

yes investors chasing yields... desperately.. they go to their financial advisers, who then tell them diversification is key... ignoring the fact that it's simply stupid to buy bonds now... but the advisers just want to keep their jobs... so just do what everyone else is doing.

now you've got 10 year at 2%, LQD at 3.5%... and companies are like...hey if I just issue paper at 3.5, and buy back stocks forward yielding 6%, it's a free 2.5%... it's like picking up free money from the floor.

3 years ago I had a thread called 'are we gonna run out of shares'.... it's such a simple situation, yet people are too blind to see it.... SP should be at 5000 right now, and will still look cheap compared to bonds.
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Let me clarify my post: I was answering the OP regarding the SPY. Commercial order flows chasing yields in the equity markets.

But I agree with your premise; my sense is that many retail/individual 401K investors are lightening up on equities and parking those proceeds into fixed income funds as a "cash" proxy. As you so presciently point out - you can lose a shit ton of money in fixed income. Even sovereign debt.
 
kmiklas said:
This market doesn’t make sense to me.

- The 10T dropped below 2% today.
- Money is flowing into gold
- No Fed rate cut yesterday
- Inverted yield curve

Yet the S&P is hovering at near record highs!!!

The above factors should drive the equities markets down as money flows into fixed income, gold, and the like.

I can see where traders might not respond to Señor T’s antics (trade war, tech antitrust, military bluffs, reactionary tweets, etc.) but these are pretty fundamental indicators.

Can anyone shed any light? Where is this liquidity coming from? Maybe the crypto market is “raising all boats.” :D

Thx, Keith :confused:
More...

Leon Cooperman still has 75% of his portfolio allocated to stocks. And he said today that he's looking for another 6 percent out of it.
 
Unemployment is down, many jobs available and more extra money available to put into stock market.

Many who been in stocks for years getting nervous and or Baby boomers rather move within retirement accounts to less risk of debt instruments. They have mentality of "not losing what they got" and yet what they got was made with sensible intelligence. They should learn spread trading.

Gold is up cause of Iran and crude oil tankers.
 
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?"
 
jeffalvinson said:
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?"
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Many more sellers than buyers :p.

And taking out the Monthly trend line that's been intact since 2009.
 
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