From Francesco Filia of Fasanara Capital
Oil: a weak present and no future
Oil correction (~10% from peak) is not necessarily the foretell of an imminent debacle. Oil corrected by approx. 20% twice in the past months (June-July 2016 and October-November 2016), without derailing the bull trend. Important supports were breached in both instances, and yet Oil managed to resurrect, powerfully.
Complacency about U.S. stocks has become so widespread that losses may lie ahead, according to Brian Belski, chief investment strategist at BMO Capital Markets. In a report Friday, Belski cited the ratio of the S&P 500 Index’s price-earnings ratio to the VIX Index, "which essentially shows how much investors are willing 'to pay' for a given level of market risk."
As Bloomberg notes, the ratio rose this month to its highest reading since 1994.
Authored by Gail Tverberg via Our Finite World blog,
The Federal Reserve would like to raise target interest rates because of inflation concerns and concern that asset bubbles are forming. Part of their concern seems to arise indirectly from the rise in oil prices, relative to their low level in early 2016.
Figure 1. WSJ figure indicating likely reasons for rate hike.
Many of the 2017 economic headwinds I’ve described will hit during the Ides of March, just as the Trump stock-market Rally shows signs of topping out. This might not be the Great Epocalypse — not all at once anyway — but a large and likely correction is looming. I think the bear is about to be let out of his cage.
The U.S. government officially has less cash than internet giant Google, with just $34 billion in the bank compared to Google’s $75 billion. In the year 1517, one of the most important innovations in financial history was invented in Amsterdam: the government bond. It was a pretty revolutionary concept. Governments had been borrowing money for thousands of years… quite often at the point of a sword. Italian city-states like Venice and Florence had been famously demanding “forced loans” from their wealthy citizens for centuries.