It is a very interesting environment.  The S&P 500 (SPX ) is up 3% in the first two weeks of the year and our 4 fundamental reasons for being so bullish in 2019 and into 2020 are becoming consensus:


  1. It is now generally accepted the Fed is not raising rates in the foreseeable future because of low inflation.  People keep blaming the Repo liquidity injections as the reason for the move higher, but I disagree.  In October at the FOMC press conference a reporter asked Fed Chair Powell what would make him raise rates and he responded by saying only a outsized rise in inflation would cause them to raise rates.  That simply isn’t happening.
  2. Historically low Corporate Debt Yields continues to suggest money is widely available at near record low corporate rates.
  3. The U.S. economy is in solid shape on the back of
    1. Full Employment
    2. High Consumer Confidence
    3. Demographic tailwind of Millennials
  4. There is an inflection in the global manufacturing/growth rate that began last year.


These are all very good things, but I am honestly getting pretty nervous our bullish thesis is now consensus and has driven the market to such historically overbought levels.  Investors have reason to be excited, but the time to be aggressive was last October, not into the most recent ramp.


Past performance is not a guarantee of future results. Index returns are unmanaged and do not reflect the deduction of any fees or expensesAll data points are sourced from Bloomberg as of 01/16/2020 unless noted otherwise.



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