As March marked the beginning of spring, the bulls were stampeded by a “perfect storm” of Central Bank actions. From the ECB dropping rates into negative territory and launching a bigger “quantitative easing” program, to the Federal Reserve backing off its plans to hike interest rates this year, the “accommodative support” gave the bulls the clearance they needed to pile back into equities.
With a short-term improvement in the technical underpinnings of the markets and an improvement in overall sentiment, the short-covering fueled rally pushed the S&P 500 back into positive territory for the year. That is where the bulls find their victory.
Yet, despite all of the “whooping and hollering” by the bulls, there has actually been little progress made. Yes, the rally from the lows has been very inspiring, but it is the same rally as seen from the previous two lows.
With volume declining on the rally as short-covering fades, the thrust of Central Bank actions now behind us, the focus will once again turn to the economic and fundamental data. From that standpoint, the “bears” remain firm in the commitments. With profit margins and earnings on the decline, economic data weak and interest rates hovering near lows, there is little support for an ongoing bull rally.
But then again, the current rally has defied expected logic up to this point. Will it continue, or will it die a quick death? With traditional summer weakness fast approaching, that is the question that must be answered and the subject of this weekend’s reading. It’s the bulls versus the bears – who will win?
CENTRAL BANKING
- The Whole Idea Of Forward Guidance Is Confusing by Caroline Baum via MarketWatch
- What Rate Tools Does The Fed Have Left by Ben Bernanke via Brookings Institution
- Shampoo Policy – Rinse & Repeat by Jeff Snider via Contra Corner
- Negative Rates Put Globe On Edge by Satyajit Das via FT
- Yellen Monetary Policy Driven By Markets by Rich Miller via Bloomberg
- Yellen Says What Markets Want To Hear by Mohamed El-Erian via Bloomberg
MARKETS & EARNINGS
- Stocks Post Best Performance Since October by Anora Mahmudova via MarketWatch
- The Two Stocks To Take The Dow Above 18000 by Alex Rosenberg via CNBC
- 2016’s Case Of Jekyll & Hyde via MarketWatch
- The Market Doesn’t Believe Yellen by Chris Matthews via Fortune
- Worse Quarter Since The Financial Crisis by Lauren Laughlin via Fortune
- Death Cross Says Stay Away From Stocks by Brett Arends via MarketWatch
- The Easiest Way For The Bull Case To Improve by Chris Ciovacco via Ciovacco Capital
- Weak Earnings May Be Markets Failure by Adam Shell via USA Today
- Get Ready For A Rough Earnings Season by Dominic Chu via CNBC
- Whats Missing From The Markets Advance by Kevin Marder via MarketWatch
- A Hidden Risk Will Sabotage Stocks by Mark Hulbert via MarketWatch
ECONOMY & OIL
- U.S. Economy Has Stalled…Again by Anthony Mirhaydari via Fiscal Times
- Impatient Banks: Real Red Flag For Oil Patch by Nick Cunningham via OilPrice.com
- A Funny Thing Happened On The Way To Recession by A Gary Shilling via Bloomberg
- Oil Surge Driven By Biggest Short Squeeze Ever by Tyler Durden via Zero Hedge
- The Big Bust In Oil Fields by Chico Harlan via Washington Post
- MLP “Reversions” Have Begun by Laura Saunders via WSJ
OTHER GOOD READS
- Systemic Risk: You’ll Know It When You See It by Ron Rimkus via CFA Institute
- Watch The Dollar For Clues by Joe Calhoun via Alhambra Partners
- A Case For Cash In 2016 by Doug Kass via Real Clear Markets
- Millennials & Low Income Buyers Driving Economy by Eric Morath via WSJ
- Repercussions Of Booms & Busts by Dan Crawford via Angry Bear
- Market Trends & Borderline Data by Bill Hester via Hussman Funds
- Decline Of The Middle Class by Noah Smith via Bloomberg
- 1700 On The S&P 500 Is Too Bullish by Keith McCullough via HedgeEye
- Indicator Suggests Bear Market Underway by Jesse Felder via The Felder Report
- Stocks Entering Weakest Quarter Of Presidential Cycle via Dana Lyons via Tumblr
“There is nothing so disastrous as a rational investment policy in an irrational world” – John Maynard Keynes
Questions, comments, suggestions – please email me.
Lance Roberts
Lance Roberts is a Chief Portfolio Strategist/Economist for Clarity Financial. He is also the host of “The Lance Roberts Show” and Chief Editor of the “Real Investment Advice” website and author of “Real Investment Daily” blog and “Real Investment Report”. Follow Lance on Facebook, Twitter, and Linked-In
