Thursday, July 16, 2020

Not Just Me

Well, unexpected/abrupt change of plans, so, while there'll still be little from me herein till next week, I did want to share the following from widely followed and hugely respected economist/strategist John Hussman. Mainly because he makes reference to the period I've been reviewing -- and commenting much on -- of late.

Still not necessarily my analog for present market conditions, but the lead-in to the bear market of late-1929+ is a very legitimate one for present investor sentiment (as were the tech and mortgage bubble episodes):    click each insert to enlarge...

This last one -- while it ("easy money doesn't help stocks" when investors turn risk-averse) seems to be least-consensus -- has absolutely been my experience over the past 36 years of doing this stuff:

Sent that last chart to the PWA team today with this comment:
This chart is priceless..... Top two lines: Green when market internals are good and the fed is easing, Blue when internals are good and he fed is tightening. Note how the market did well under both fed scenarios (internals were good)...
Bottom two lines: Orange when market internals were bad and the fed was easing, Red when internals were bad and the fed was tightening....
Bottom line, when market internals are bad, (when the economy is bad), even easy money (unless this time is different) can't keep  the stock market from eventually meeting with reality:
That last chart also explains why, historically-speaking, our PWA Macro index has done a good job of signaling trouble ahead. 

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