Wednesday, April 10, 2013

The Stock Market (Excerpt)

Previously, I’ve shown that the current bull market in the S&P 500 since 2009 through 2013 so far has tracked a virtually identical course as the prior one from 2003-2007. Indeed, they both fit on the same scale for the S&P 500 from 600-1600. (However, the last bull market was somewhat less volatile than the current one, so the go-away-in-May advice was an even less successful strategy back then.) The previous bull market was gored by a global credit crunch.

This time, central banks have flooded the global capital markets with liquidity, which is one of the main reasons I expect that 2013 will part ways with 2007. Government bond yields in the US, Germany, France, and Japan have dropped to record or near-record lows this week following the BoJ’s pledge to double its balance sheet over the next two years. Dodgy credits have also benefitted from the global bond rally, most notably among the sovereign debts of the peripheral euro zone countries and high yield bonds.

The result has been that many investors are scrambling to load up on even more stocks paying dividends.

Today's Morning Briefing: Super Market. (1) 1665 is only 5% above yesterday’s close. (2) The trick to riding bulls. (3) Who cares about Italy and Cyprus, or Lil’ Kim? (4) Technicians seeing bad stuff in their charts. (5) Don’t bet against the three richest men in the world. (6) Irrational exuberance, here we come? (7) Scrambling for dividend-yielding stocks as central banks push bond yields closer to zero. (8) Performance Derby is a mixed bag so far in April consistent with broad bull market. (9) Still keen on bull’s outperformers: Consumer Discretionary, Financials, and Industrials. (10) Not as keen on Energy and Materials. (11) IT is cheap. (More for subscribers.)

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