Where's the market correction?

[786Trader]

Here we are in mid November and the predicted market correction in US equities has so far failed to materialise. Market exuberance has continued and new all time market highs registered. The trade disagreements with China and the EU continue unresolved, climate continues to change (despite many deniers), Honk Kong continues in open revolt to China's heavy handed manipulation, the Middle East still foments discontent, and Trump is being impeached and yet the markets are unmoved.  Some kind of optimism. How long can this last? Is the only way really up? Frankly I want whatever Optimism Plus the Bulls are on, as I am still scratching my head on the thorny issue of relentless, unchecked expansion and ever increasing equity values built on  the earth shattering 2% increase in GDP.  Either my slide-rule  is chronically misaligned  (+2% gdp=+14% equity increase since Jan 1st 2019) or this unchecked Bullishness is veering on arrogance or good old fashioned financial myopia.  Or too much of a good thing.  

Of course, this could easily continue on until the cows come home or Trump gets re-elected, whichever is sooner. Or not. 

There is still a cogent argument for maintaining a hedge in this scenario, as witnessed in the gold price. Gold is high, as are equities and the demand for government bonds remains healthy, which is unnerving in itself (it's normally 2 out of 3). Even Lumber has reached its fair value.  My point being this situation cannot be relied upon to continue in the medium term. Something has got to give.  But how long? Christmas? Easter?  Next election? Depends on the Presidents sanity, I guess.  The Market Correction has failed to materialise, it is either late or is going to skip this cycle completely, or it's gone on one of those yogic retreats or said it's gone on one of those yogic retreats but has actually gone golfing. With the President.

 

[Caseynotes]

The Trump impeachment hearing is turning into a joke, when the 2 'star witnesses' were asked just what they thought Trump should be impeached for neither could answer, their 'evidence' turns out to be second and third hand which they said was often more reliable than first hand evidence ...jeez.

Open interest in the indices is still low, the big fund mangers are still waiting, Trump could end the trade dispute tomorrow if he wanted, in which case retail sales, indy production and GDP would take off.

So there is just as good a case for a restart of the bull market after 18 months plus of consolidation as there is for any correction down and the market looks to be playing a waiting game sitting on the highs currently rather than the lows so optimistic rather than pessimistic.

I do agree with your last para @786Trader

[786Trader]

Agree the impeachment is turning into a bit of a farce. It is one thing knowing what occurred and quite another to prove it, as the proceedings show. Impeachment does not work, often has the reverse effect. 

Also, I concur, the trade war is entirely Trumps making and he could end it today if he chose. I might also suggest the past 18 months have more than consolidated the markets; they have consistently broken all time highs.  We are witnessing the top of a cycle,  yes it could kick on and break out into the stratosphere, but not for long. Sooner or later, for better or for worse, the basic tenets of global free market capitalism will be questioned with regard the continued wholesale exploitation of our planet's resources and people, regarding long term sustainability. Thorny issues indeed.  The easy way is to ignore/avoid and hope for the best. 

  Not to mention global real politic having an effect on US equities and commodity prices, thereby validating the watch and wait strategy.

Thanks fo the interesting and informed  comment (as usual) and I wish you a fine evening.

[dmedin]

45 minutes ago, Caseynotes said:

Trump could end the trade dispute tomorrow if he wanted

If that's true, then he is a massive a-hole (I assumed the media was laying blame on him to avoid the complex reality of the forces pulling the strings behind the scenes, just like how Dubya was an idiot puppet president).

Bernie Sanders or bust

 

Edited November 14, 2019 by dmedin

[Caseynotes]

3 minutes ago, dmedin said:

If that's true, then he is a massive a-hole (I assumed the media was laying blame on him to avoid the complex reality of the forces pulling the strings behind the scenes, just like how Dubya was an idiot puppet president).

Bernie Sanders or bust

 

The important point all along was perpetual intellectual property theft, everything else was just dressing. Interestingly China a few days ago signed an agreement with the EU regarding IP rights but I have not had a change to go into it yet.