As we enter the final laps of the longest bull market in US history, folks are getting understandably antsyIn July 2007, Citigroup CEO Chuck Prince famously portended “…as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”
Unfortunately, he and his natty banking buddies were about to dance off a cliff.
Nine-and-a-half years into the current bull market, here’s a couple of the reasons we’re still dancing.
The yield curve is upward sloping – with the 10-year at 2.9% and the 2-year at 2.6%. Inverted yield curves have predicted the last nine recessions. Prior to the financial crisis, the yield curve inverted in January 2006 - more than 1.5 years before the bear market.
FYI: The market continued to climb nearly 15% over this period.
Profits are soaring. Consumer spending, tax cuts and relatively stagnant wages have lifted after-tax corporate profits to the highest level since 1950.
Yes, our feet are achy. We know this party too shall end.
Just not yet.
Weekly Update through August 31, 2018 The S&P 500 added 98bps, even as the Dow Jones gained 79bps, the Russell 2000 added 91bps the Nasdaq advanced 2.07%.
As for US bonds, they declined -12bps.
Globally, the MSCI World Index added 68bps and the Barclays Global Aggregate Bond Index increased 1bp.
The Euro Stoxx 50 lost -1.01% in local-currency (Euro) and -1.25% in USD. Meanwhile, the Topix advanced 1.56% in local-currency (Yen) and 1.67% in USD.
Month-end Update through end-August 2018 In August, the S&P 500 added 3.26%, the Dow Jones gained 2.56%, the Russell 2000 added 4.31% and the Nasdaq gained 5.85%
As for US bonds, they increased 64bps.
Globally, the MSCI World Index added 1.29% and the Barclays Global Aggregate Bond Index added 10bps.
In August, the Euro Stoxx 50 declined -3.70% in local-currency (Euro) and -4.60% in USD. Meanwhile, the Topix lost -1.00% in local-currency (Yen) and -35bps in USD.
