The foundation of the markets for the entirety of this bull market has undergone a massive shift in 2018. All the meanwhile, a majority of market participants are stuck in level one, simpleton thinking mode, which has grabbed the collective hands of equity investors, guiding them blindfolded to the edge of a cliff, with promises of paradise on the horizon.
All of the reasons equity investors have to be bullish is based on knowledge that is abundantly obvious and therefore, already completely baked into the picture being presented. Irrelevant, in other words.
Earnings? Irrelevant.
Tax cuts? Irrelevant.
Fiscal stimulus? Irrelevant.
Deregulation? Irrelevant.
All of these well known hooks to hang your hat on if you're bullish were fantastic in 2017 because there was actual doubt surrounding their implementation and relevance.
What we have now are the following emerging facts that investors are unsure of how to interpret, therefore, warranting concern over their future relevance:
The secular bear in interest rates may be over.
Commodities, led by energy, are entering a significant uptrend.
The financial markets are structurally unsound and untested due to prevalence of passive products dominating investment landscape for the first time in history.
All the meanwhile the S&P 500 is carving out a bearish pattern below resistance:
And the most relevant leader in technology is telegraphing substantial weakness in the sector moving forward:
Oil has experienced a substantial breakout in recent weeks. It may just be getting started:
Leading to the final piece of the puzzle...yields. The yield on the ten year saw a minor rejection this week right at the 3% mark, which just so happens to coincide with a multi-decade trajectory point. An eventual substantial move above 3% is an inevitable conclusion to this saga. With a strong likelihood of something in the 3.5% range by year end.
It's time for investors to take the macro picture very seriously, as the old tune of earnings and corporate prowess are due to take a backseat to inflation and interest rates.
Disclaimer
This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice.
This website should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein. Viewers of this website will not be considered clients of T11 Capital Management LLC just by virtue of access to this website.
T11 Capital Management LLC only conducts business in jurisdictions where licensed, registered, or where an applicable registration exemption or exclusion exists. Information contained herein is not intended for persons in any jurisdiction where such distribution or use would be contrary to the laws or regulations of that jurisdiction, or which would subject T11 Capital Management LLC to any unintended registration requirements. Visitors to this site should not construe any discussion or information contained herein as personalized advice from T11 Capital Management LLC. Visitors should discuss the personal applicability of the specific products, services, strategies, or issues posted herein with a professional advisor of his or her choosing.
Information throughout this site, whether stock quotes, charts, articles, or any other statement or statements regarding capital markets or other financial information, is obtained from sources which we, and our suppliers believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Neither our information providers nor we shall be liable for any errors or inaccuracies, regardless of cause, or the lack of timeliness of, or for any delay or interruption in, the transmission thereof to the user. With respect to information regarding financial performance, nothing on this website should be interpreted as a statement or implication that past results are an indication of future performance.
