Submitted by Lance Roberts via RealInvestmentAdvice.com,
Over the last few week’s I have discussed the post-election surge in the market based on rather optimistic outlooks as opposed to the technical underpinnings that currently exists. As I specially stated in last weekend’s newsletter entitle “Dow 20,000”:
“If this market rally seems eerily familiar, it’s because it is. In fact, the backdrop of the rally reminds me much of what was happening in 1999.
1999
- Fed was hiking rates as worries about inflationary pressures were present.
- Economic growth was improving
- Interest and inflation were rising
- Earnings were rising through the use of “new metrics,” share buybacks and an M&A spree. (Who can forget the market greats of Enron, Worldcom & Global Crossing)
- Stock market was beginning to go parabolic as exuberance exploded in a “can’t lose market.”
If you were around then, you will remember.”
Of course, this is what we were told this week by Janet Yellen, and the Fed, as they finally lifted rates for the first time in 2016 with the expectation the economy will continue to perform “well,” the current rate is only modestly below the “neutral” rate, and the rate hike is a vote of confidence in the economy. Or course, the irony is when she stated the Fed is expecting to hike rates 3-times next year. Considering their previous track record for lifting rates, it is astonishing the market continues to “buy” the nonsense.
As I penned last weekend, the ramp up in the market against a backdrop of a “fear” of rising inflationary pressures, when none really exists, is a dangerous brew for the markets. With interest rates and the U.S. Dollar already heavily front running the Fed in the tightening of monetary policy, there is a very high risk of an “accident” occurring which takes investors by surprise.
But for now it is the holiday season, so “hope” is much more “fun” than the politics of reality. Which reminds me, it is that special time of year to share “Festivus.”
Here is what I am reading this weekend.
Fed, Economy & More Trump
- Trump’s Unhappy Fate Is To Oversee A Crisis by James Rickards via Daily Reckoning
- Fed & The Destruction Of The American Dream by Danielle DiMartino-Booth
- Why Trump Is Biggest Risk To Global Economy by Ivana Kottasova via CNN Money
- Reversing The Tragic Trends Of Our Time by IBD
- Trumps Self-Defeating Trade Policy by Steve Chapman via Reason.com
- Economy Not As Strong As Consensus Believes by Robert Johnson via MorningStarr
- What A Fed Rate Hike Will Mean by Patrick Gillespie via CNN Money
- What Markets Did Last Time Fed Raised Rates by Katie Little via CNBC
- Some Factors To Consider About Trumphopia by Anthony Mirhaydari via The Fiscal Times
- Will Fed Words Finally Come To Something by Caroline Baum via MarketWatch
- Trump Doesn’t Herald New Paradigm Of Growth by Joachim Fels via PIMCO
- Trump, Crony Capitalist-In-Chief by David Cay Johnston via Daily Beast
- Fed’s Rate Increase And You by Stephen Gandel via Fortune
- Air Pocket Coming To Houston Home Sales – by Aaron Layman
Markets
- Bonds Are Flashing A Warning Sign For Stocks by Jonathan Garber via BI
- The One Chart “Trump Traders” Must See by Greg Guenthner via Daily Reckoning
- Gundlach: Watch For “Sell Off” By Inauguration by Akin Oyedele via BI
- Now Is The Perfect Time To Buy Stocks by Bryan Rich via Forbes
- How To Make The Trump Rally Last by Mohamed El-Erian via Bloomberg
- The “Big Fat Ugly Bubble” Is The Threat by Mark Spitznagel via ZeroHedge
- Real Winner Of OPEC Deal: Shale Drillers by Patti Domm via CNBC
- Markets In The Trump Era by Jonathon Trugman via NY Post
- Feel Great About The Market? Some Perspective by Gregg Fisher via Gerstein-Fisher
- How Trump Could Blow Up The Bull Market by John Mauldin via Forbes
- 7-Stumbling Blocks To The Market by Evelyn Cheng via CNBC
- 5-Lies Investors Tell Themselves by John Coumarianos via WSJ
- Trump Rally Biggest Since Hoover by Sue Chang via MarketWatch
- What Would Bertrand Russell Say About The Index by Doug Kass via Real Clear Markets
- Dow 20,000? Do I Hear 21? by Michael Kahn via Barron’s
- Back To Extreme Greed by Chris Sheridan via Financial Sense
- Dividends Show Distress In Economy by Ironman via Political Calculations
- How Overpriced Is The Market Anyway by Michael Kahn via Barron’s
- Goldman Sachs’ Covert Scheme To Raise Oil Prices by Michael Covel via Daily Reckoning
Interesting Reads
- Real “Fake News” Is Mainstream Media by Tom Basile via Forbes
- This Christmas We Need Humility by Stephen Moore via The Washington Times
- The Complexity Of Inequality by Michael Heise via Project Syndicate
- 4-Lessons Of America’s Election by Michael Boskin via Project Syndicate
- Risk Of A Global Conflagration Has Risen via Council On Foreign Relations
- Time For A Return Of Keynes by Therese Raphael via Bloomberg
- Did ACA Add 20-Million To Insurance Rolls? No. by IBD
- Hamilton Would Not Approve by Lambert Strether via Naked Capitalism
- A Short Squeeze In Treasuries by Edward Harrison via Credit Writedowns
- American Dream May Be Hard To Revive by Bob Davis via WSJ
- Will Trump Bring Higher Rates? Don’t Count On It by Neil Irwin via NYT
- Emerging Market Hat Trick by Rob Arnott via Research Affiliates
- Interest On Debt Fastest Growing Budget Item by CRFB
- Historical Valuation Measures Are Double by John Hussman via Hussman Funds
- This Is The Index To Watch by Dana Lyons via Tumblr
- Why Is The Fed Tilting At Windmills by Jesse Felder via The Felder Report
“Without action, the best intentions in the world are nothing more than that: intentions.” ? Jordan Belfort, The Wolf of Wall Street