What was missing for most of this secular bull market was reinvestment in the USA. Most of those investment dollars were clearly going offshore not least because of Obama Administration policy initiatives and promotion of the regulatory State. The corporations were doing fine, just elsewhere.
This also explains just how easy it was for Trump to succeed in Jaw boning the USA economy back into a robust health. The Global economy has been expanding and will continue to do so because the whole global population is fully monetizing and accessing cell phone banking. It is the USA which has been draggging its feet through stupid policy not unlike what has been done at times elsewhere.
Recent shakedowns on Tariffs are all about forcing open negotiations in regard to general trade. Trump happens to be a free trader who understands that it takes two free traders to make it work. The USA has been as guilty as anyone but so what. Start a trade war so all bad behavior gets confronted..
Get The Champagne Out": In 14 Trading Days This Becomes The Longest Bull Market Of All Time
Last September, the S&P's run became the second longest bull market in history.
Then, during this year's January melt up, the S&P500 bull market became the 2nd largest of all time on Friday Jan 26th, when the index hit an all time high of 2873.
And now, Bank of America's Chief Investment Officer Michael Hartnett writes to "Get the champagne out For US stocks", because we are now just 14 trading days to go until the S&P 500 bull market becomes the longest of all-time, at 3,543 days, on August 22, 2018.
There was some early celebration yesterday, when Apple became the first US company to cross the $1 trillion market cap... but not the first in the world: that honor belongs to Petrochina, whose market cap briefly hit $1.1 trillion in 2007...
Meanwhile, Italy-Germany spreads (EU lead indicator), KOSPI/copper (China lead indicator) all suggest further global PMI deceleration in the second half.
Additionally, the recent peak in US auto sales suggests higher US unemployment...
... while the price action in US housing (lumber prices), hotels (MAR), casinos (WYNN), restaurants (MCD, CAKE) is inconsistent with US consumer boom (HD the ultimate tell).
Then there is Peak Policy: Japan's shift in Yield Curve Control this week was another step from QE to QT, and as a result, central bank asset buying has been dropping sharply: from $1.60 trillion in 2016, to $2.30 trilion in 2017, to less than $0.17tn in 2018 (as described in The Central Bank Party Is Already Over).
Meanwhile, returns outside of equities are already starting to reflect a potential slowdown:
commodities 4.0%, US$ 2.8%, stocks 2.8% (ex. US tech global equities -0.8%), cash 0.9%, HY bonds -0.2%, govt bonds -1.6%, IG bonds -2.8%; as Hartnett puts it "Profits & Policy consistent with tougher 2018 returns."
Champagne for US tech: Apple 1st US company with $1 trillion market cap (prior
landmarks 2007 PetroChina $1 trillion, 1987 IBM $100bn, 1901 US Steel $1bn)
Still, while the longest bull market of all time appears to be generally in the books, will the S&P also then follow up with become the greatest bull market of all time in percentage, which would happen should it hit 3,498 on the S&P500.
According to Hartnett, there are two critical conditions that need to happen for that one final record to be broken:
- An unanticipated surge in productivity growth, and
- A speculative bubble from a Great Rotation out of negatively yielding debt into stock markets.
Or as Deutsche Bank puts it, "every Fed tightening cycle creates a meaningful crisis somewhere."
Until then, here is a chart from the Visual Capitalist counting down the six longest bull markets of the modern era.