INSUBCONTINENT EXCLUSIVE:
By Sarah PonczekBetween Donald Trump’s trade tweeting, an about-face at the Fed, the buckling and unbuckling of the yield curve, trading
stocks in 2019 seemed like a never-ending ordeal of volatility and confusion
Operative word being “seemed.”
In fact, going by one measure, the frequency of up days, you have to go back a quarter century to find a
market in which it was easier to sit quietly and hold equities than this one
While it has felt like a bumpy ride, the S-P 500 has climbed on 58.9 per cent of days this year, an almost unheard of proportion.
Two
stretches explain the data
First was January and February, when -- after nearly dying at Christmas -- the bull market roared back via the biggest quarterly rally in a
The second is now, a period of sustained strength that beats any in two years and has some pundits worried everything is
overheating.
“It’s just a slow and steady climb,” said Christopher Ailman, chief investment officer at the California State
Teachers’ Retirement System
“That’s actually good, that’s exactly what we want.”
Not that investors have behaved that way
Money has rushed out of equities and into bonds all year long as recession fears rang and tariffs lashed markets
All good things must come to an end, so the saying goes, and scars from the financial crisis are still evident over a decade later
Why celebrate, when you can worry about how good it’s been?
Before this week, the S-P 500 had gone 37 straight days without an intraday
decline of 1 per cent, the longest streak since January 2018
Inside of three months, the benchmark has jumped 9 per cent, gaining in eight of the last nine weeks
With 139 days colored green, the frequency of gains is 5 percentage points higher than the average over the last 25 years.
An environment of
And yet skeptic minds wonder if it’s too much -- a last-gasp before the wind is sucked out
Gains have been too uniform, too robotic
There was a moment in late November when the S-P 500 had been up over the previous one, two, four, eight, 12, 26, 39, and 52 weeks
According to Sundial Research’s Jason Goepfert, that might seem like “blow-off top conditions,” but in data going back to 1928, out of
21 similarly steep ascents only three gave way to a 10 per cent correction at any point in the year that followed.
Ned Davis, of the
namesake research firm, compared the most recent run to so-called blow-offs of bull markets past and found that the pace of gains since
mid-August rings of a “potential warning.” But in a research note this week he acknowledged, “what looks like a ‘blow-off’ at the
time, may later turn out to be just another leg of a bull market.”
In a way, all the worry is why strategists across Wall Street are
confident there’s more to come
While Jeff Mills, the chief investment officer at Bryn Mawr Trust, wouldn’t be surprised to see a 5 per cent pullback, he doesn’t sense
The latest run strikes Michael Antonelli, market strategist at Robert W
Baird - Co, more as a break-out from a period of consolidation.
Tracie McMillion, the head of global asset allocation strategy at Wells
Fargo Investment Institute, has a similar view
Roughly 600 investors attended her firm’s Global Investment Symposium at the Plaza Hotel in New York City this week, and prudence was a
common topic.
“It’s that thread of caution through all of the speakers that we’re hearing from that tells us that we’re probably not
at the top,” she said in an interview at Bloomberg’s New York headquarters
“You don’t typically see that at a blow-off top
You typically see everyone wanting to move into the markets
They’re not asking the question about, ‘Is it too late?’ They’re saying, ‘How much more can I put in’?”
The S-P 500 gained
0.2 per cent this week, after the benchmark surged 1 per cent Friday on the back of a better-than-expected jobs report
With the S-P 500 up 26 per cent this year, the second best gain this decade, investors now turn to a Federal Reserve meeting next week and
the looming December 15 U.S.-China tariff deadline.
“What the markets are priced for is the continuation of middling economic data, well
contained inflation and a Federal Reserve that at least for the meantime sits on the sidelines,” said David Donabedian, chief investment
officer of CIBC Private Wealth Management, which oversees roughly $60 billion
“We still view this as an unloved bull market.”
