First of all, I want to wish everyone a Happy Memorial Day! This day was not meant as a memory to the great and powerful BBQ, or the Indy 500. It is a day that we remember and honor those who died in military service in the protection of our country and freedom. Thanks to all that allow us to live in a free country.
Speaking of free countries, the Ukraine had their elections over the weekend with a resounding win by the confectionery magnate, Petro Poroshenko. It appeared that there was no interference by Russia in the elections, and that the runner up, Yulia Tymoshenko who had 13% of the vote was due to put in a concession speech as not to cause any political instability.
So there you have it…the world is now fixed. No further problems can happen. We know that, because we hit another all time high in the markets. I’m just so excited to see another all time high in the markets (sarcasm!!!). The reason it is so exciting is that I get to deal with another margin call on Tuesday. Hooray!
I have to be the only remaining bear. The others have all died and been buried. The bears are extinct. You may have the chance to see one stuffed on some bull’s mantel next to the piles of cash they have that continue to fuel the rally. It is astounding that after a 5 year plus bull market, we continue to make daily record highs in the broad markets.
To add fuel to my confusion is the fact that the bond market is not crashing. You would think that if the all clear is still here in the markets, the bond market would fall from people pulling money out of the safe haven area back into risk assets (the stock market). But that is not happening. The opposite is true. The bond market is making a run to the north as well. We are seeing the yields dropping more on the all the ranges of bond duration. In addition, we have the volatility indexes dropping further. More evidence that NO ONE HAS ANY FEAR OF THE MARKETS COLLAPSING!!!!
That is bad news for the last remaining bear. But if you were a first time investor, and you saw the market at all time highs, would you be a buyer?
In the economic world, Monday we have the markets closed and no reports to consider. The futures markets were open for a while, pushing the S&P500 futures to 1904, again an all time high. Even the Dow futures were up over 16,600. I’m concerned that with a new month approaching, and new money poised to enter the markets, we could see a continuation of the climb to infinity of the markets.
Tuesday brings us the durable goods orders. With a forecast of -0,8% from a previous gain of 2.5%, I have no idea how that is a positive thing for growth. We also have the home price indexes coming out. We shall see if the home prices are still rising at a steady pace, or starting to falter. Tuesday will be rounded out by the consumer confidence numbers which are actually forecast for a small drop of 0.2% from the previous month.
Wednesday there are no reports to speak of.
Thursday besides our weekly jobless claim numbers, which are due to come out at 322K, we have the GDP revision numbers. As you might remember that the Q1 GDP numbers were originally set at 2.6% growth, then lowered to 1.2% growth because of the weather factor in the mid-west and north-east…but actually came out at 0.1% growth. Now the forecast for the revision is looking at a contraction of 0.6%. Not exactly the amazing economy the market is supporting.
Lastly Thursday we have the pending home sales. With interest rates falling again due to a strong bond market. I would imagine we should see some good sales posted.
Friday is the personal income and consumer spending. These are some of the big drivers of a forward moving economy. With forecast of 0.3% and 0.0% respectively, that again is not cause for a party of economic growth.
We finish with the University of Michigan Consumer sentiment report. There are expectations of a higher confidence in this economy. Well…we shall see.