Comments (2)

  1. Libby Hustler says:

    Dave I am ashamed to admit I haven’t read EVA very often, after reading this weeks edition I will be reading each weeks. Love your term “QEing”.

  2. curious mayhem says:

    This week’s arguments are interesting, but the reasons given by Anatole Kaletsky for a new secular bull market are implausible. There’s no sign that the secular bear market that started in 2000 ever ended. SECULAR STOCK CYCLES are determined by valuations, not by prices.

    The net domestic support for US equities has come entirely from Corporations buying back shares, largely supported by debt issuance: an extreme equity-for-debt swap, propped up by extreme monetary policy. This is known and widely appreciated. The other domestic participants have been net sellers of equities. What is not as appreciated yet, is the role of foreign flight capital coming to The US. Almost all developed and many emerging equity markets are off their generational peaks OF 2000 or 2007 and now exhibit bear market rallies. Only the US, UK, and German markets have not yet completed their main rallies. They are the big beneficiaries of CONTINUING global QE and nervous investors pouring money into the perceived safest markets.

    The best perspective on the current “melt-up” in US stocks is to see extraordinary global stimulus and low inflation as supporting High valuations, putting the secular bear into hiding. The current mania is a re-awakening and expansion of the late 1990s bubble, with about the same valuations. The bear will return, probably resulting in the largest credit crisis in history.

    Elliott wave analysis provides a final perspective, implying the historic (“high-degree”) end of a last, fifth wave of a grand bull run that began long ago, with no comfort for those who believe in a new secular bull market.

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