There's a lot of media attention lately about how the bull market made a new milestone by hitting a marginal new high and is now 3454 days old, but as I type this the market has since reversed a bit off those highs. Articles that discuss the bull market point out how it's been met with skepticism all throughout it and the funny thing is that it has been these same media outlets that have fueled that skepticism with their constant negative articles. I've been documenting it here for years about how the financial media has been poo pooing this bull run since day 1. So then, should we view this widespread acknowledgement of the bull market as a contrary indicator signaling the end of the bull market? I think that's being too cute but it could very well mark a temporary top.
At the ultimate top I expect there to be a full embracing of the bull market. We saw a glimpse of that in December and January but the correction that followed quickly extinguished it. We saw heavy fund flows from Nov- Jan turning negative and flat since February and that's a good thing if you want to have that wall of worry rebuilt for the bull market to climb on. I was hoping to see more volatility throughout the summer to put the market in better position to push through the January peak but it didn't happen. It would seem to me that if we continue to rally here the odds of false breakout would be high but when it comes to making short term calls like this I'll admit that I can certainly get it wrong. I've made some good calls and bad ones too when it comes to the short term and that's natural because the shorter the time frame the more that randomness plays a factor. It's more important to get the long term trend right.
Something that's not really capturing the financial media's attention as much as it should be is slowing housing in the US which probably can be attributed to higher rates. This is very important as most recessions tend to originate from a housing downturn, not bullshit like what's happening in North Korea, Turkey, Italy or what Trump tweeted at 3am while taking a dump. At the very least, a slowdown in housing will put the brakes on US growth and if the Fed is slow to realize this and they keep hiking rates, it can turn the slowdown into outright contraction and that can eventually tip the economy into recession. With oil prices and commodity prices moderating and with memories of 2008 still relatively fresh, I think there's a decent chance the Fed will be able to see the risks of continuing their expected rate hike path and they put a stop to it much sooner than people are expecting. Everyone is expecting another 2 rate hikes before the end of the year and more to come in 2019. I think the expectations for 2019 will be proven dead wrong and we may not even get a hike in December. But I'm not going to hold my breath with the Fed as history shows they can certainly get it wrong when it comes to turning points in the economy. It will be an interesting next few months...
