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Interest Rate Spike Could Derail the Equity Buying Binge
“The economy is on the mend and vaccine distribution is improving which provides the back drop supporting the buy-the-dip mentality no matter how shallow.
Please share this article - Go to very top of page, right hand side, for social media buttons. There is no doubt that the bull market that began in March 2020 after a 35% plunge has evolved into a speculative binge that has further to run. The expectation was that the S&P 500 would experience a sharp decline that would bring it down to 3550 before a subsequent rally took the S&P 500 above 4000.
A Fundamental Bull Market or Speculative Binge
A fundamental bull market is supported by broad based economic growth which spurs solid growth in worker s wages and organic growth in corporate revenue and cash flow. The steady increase in economic activity lifts the stock market but the market s valuation is below the 75th percentile of historical valuations. A fundamentally driven bull market is not dependent on the economy needing an extraordinary amount of fiscal stimulus to avoid a recession and surge in bankruptcies
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The Spell Of Money
Macro Tides Weekly Technical Review 25 January 2021
St. Patrick s Day is still 51 days away but penny stock speculators, call option traders, and institutional money managers can only see green. The Federal Reserve will continue to expand its balance sheet by $120 billion a month with its purchases of $80 billion of Treasury bonds and $40 billion of Mortgage Backed Securities as far as the eye can see. Congress has already authorized more than $3 trillion in fiscal stimulus and may add another $1.9 trillion in coming weeks.
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More Money For Trading
Macro Tides Weekly Technical Review 18 January 2021
President elect Biden unveiled his $1.9 trillion American Rescue Plan last week which is likely to run into some opposition, especially sending $1,400 checks to individuals earning less than $75,000 and couples $150,000. These payments will be sent whether a person is employed and whose income hasn t been materially reduced by COVID-19.
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In October the Federal Reserve of New York asked 1,300 households how they spent their initial stimulus money which averaged $2,400 per household.
36% of stimulus payments were saved.