Authored by Richard Breslow via Bloomberg,
With a few exceptions, that no one seems particularly bothered by, the economic numbers have come in to the upside today. Pride of place goes to China’s Caixin PMI. The mixed sub-components, notwithstanding. You know where traders’ heads are at when the focus is on the manufacturing number being the highest in almost three years, rather than the warts within the report. Nary a soul is raising the usual questions about the numbers’ veracity. When the world wants to be happy, who’s going to argue? Certainly not global equity markets.
Fixed-income markets had the self-respect to sell off. Hard actually…
Talk of recessions and further rate cuts will have to be suspended until further notice. Or we get the first share sell-off in the new year. It seems that the equity rally is so convincing that portfolio managers are questioning whether they need their bonds as must-have hedges for their stock holdings. If such thoughts continue, we could be in for a very interesting month. It’s tempting to get carried away. Which hasn’t been a great strategy this year.
Gold looks like it’s collapsing until you realize that, so far at least, it’s having an inside day from this past Friday.
And the Dollar Index refuses to get excited about anything.
Even though we have been assured that biggies like sterling and the euro are “in play.” Emerging market currencies never got the feel-good memo and can get no traction.
This is a market in search of a narrative.
And the only one it can comfortably settle on is the belief, rightly or wrongly, that equities remain the best game in town. Some would argue the only one. And why not? Everyone seems to be rooting them on.
You won’t be hearing any central bankers talking about asset bubbles. Especially in December. But you will be assured that favorable financial conditions are good for one and all. “We have room to do more” isn’t a favorite punchline because of anxiety over the prospects for the upcoming non-farm payrolls numbers. If anything the whisper number is creeping up.
I was reading a research report this morning, which laid out the issues they thought would be front and center in the U.S. presidential election. All relevant. Especially during debates. But the lack of including the level of the S&P 500 seemed like an overly squeamish, and mistaken, omission.
Over the holiday, I was fascinated by three separate conversations. They were certainly instructive.
One was on a farm where everyone avowed to being a staunch Republican.
Another with liberal and well-heeled suburbanites. Purportedly with mixed affiliations.
And, lastly, a table of New Yorkers who claim, one and all, to be committed Democrats.
In each case, the strength of the stock market was the great unifier. And a popular subject of discussion. No one was complaining. Or simply trying to be polite. Something to keep in mind. It made me wonder what they were actually giving thanks for. And to whom.
If you want to properly handicap election polls, you need to keep in focus what is actually on voters’ minds. Perhaps that’s why there have been so many surprises. And the U.S. isn’t the only country with choices to make.