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Are We All In?




Weekly Writing 2018.01.08

There never has been a time when market participants were more certain that there is no way central bankers will allow a financial market crash. Their infallibility goes without question. The good Lord himself has taken a backseat. Note the following total returns obtained during 2017, all positive:

 

S&P 500

21.8%

China

22.0%

Dow Jones

25.1%

Taiwan

14.0%

Nasdaq

28.2%

DAX

12.5%

Nikkei

19.1%

Italy

13.6%

S. Korea

27.9%

France

9.3%

Hong Kong

36.0%

Turkey

47.6%

Indonesia

20.0%

Poland

23.2%

Vietnam

48.0%

Hungary

23.0%

Singapore

18.0%

Brazil

26.7%

Argentina

77.7%

Chile

34.0%

 

You might note that the weakest countries had the best returns. That, to my mind, raises a red flag. But let’s be honest. My flagpole has long ago bit the dust due to the overload of red flags.

 

If the above was not enough, note some numbers concerning the first week of the new year. Again, all positive:

 

S&P 500

2.6%

Shanghai

2.6%

DAX

3.1%

Brazil

3.5%

France

3.0%

Russia

4.6%

Spain

3.7%

Argentina

7.1%

Italy

4.2%

Romania

3.0%

Japan

4.2%

Pakistan

5.1%

Hong Kong

3.0%

Poland

2.5%

 

All this from just four days of trading. Why go to school? Why get a job? One needs only to borrow some money and buy the world’s common stocks. It’s easy street, until it isn’t. “Whether on a U.S. or global basis, there is a broad consensus view that 'fundamentals' are exceptionally constructive. Lost in all the euphoria is the critical issue of finance (debt): global finance is alarmingly unsound,” so says the Credit Bubble Bulletin. It’s hard to believe this could go on forever, but of course I’ve said that several times before. Being right on the fundamentals but wrong on the market is not being warm and fuzzy. Wrong on the fundamentals and right on the markets would have enhanced the kitchen table. Oh well.

 

The following three charts depict the good, and then the bad and ugly. One of these days they will all get in line.

 

 

 

 

 

 

 


The Best,
Don S. Peters

Information contained in these commentaries is based upon information obtained from sources both external and internal which we consider to be reliable, but the accuracy of the information and the recommendations contained herein cannot be guaranteed, nor do they constitute a solicitation for the purchase or sale of any securities mentioned herein. Information contained in this commentary may not be reproduced in any form without written permission from Donald S. Peters.