Authored by Bryce Coward via Gavekal Capital blog,
As 1Q17 finishes with a gain in the books, the stock to bond performance ratio has also broken to a new cycle high, elevating to levels not seen since mid-2007.
Our measure of the stock to bond ratio measures the total return of the S&P 500 relative to that of the JPM 10 year treasury total return index. When the blue line rises, stocks are outperforming bonds, and vice versa.
Via Dana Lyons' Tumblr,
The percentage of respondents in UM’s survey of consumers who view a stock rally over the next 12 months as a “sure thing” is near record levels.
We start off Sunday with the traditional anecdote from One River's Eric Peters
“Humans sell low and buy high,” said Yoda, high in the Rockies. “And in those moments they believe it’s for good reason. It cannot be otherwise.” Snow fell, rain too. Spring on its way.
“Bear markets end when every piece of news is seen as an excuse to sell. And bull markets peak when the opposite is true.” Somewhere in the clouds Nasdaq futures were breaching all-time highs, defying the latest Twitter tempest.
One glance at the shocking headlines over the first quarter of 2017 and one would imagine intense volatility in the world's capital markets - from the leader of the free world being 'managed' by Putin to North Korean Nukes; and from Fed rate hikes to the rise of populism in Europe. But that would be entirely wrong - Q1 2017 was the calmest for US stocks since 2006...
Just a week ago, it looked as if the dormant CBOE Volatility Index was awakening.
Judging by recent market action, it is becoming apparent that traders and investors are getting if not tired, then displeased with having to trade what boils down to one of two narratives: Trump Reflation Trade On, and - as has been the case recently - Trump Trade Off. As much is apparent in the latest weekly kickstart note from David Kostin who writes that with the market struggling to readjust its expectations for US government policy following the move away from health care reform, client conversations make clear that investors fall into two camps: