Displaying items by tag: bull market

(New York)

JP Morgan is joining the bullish bandwagon. While fear that the rally has been too fast permeates across the markets, JP Morgan is stepping in to say that they think the market has plenty of runway higher. The bank thinks stocks have a good tailwind behind them as a trio of positive factors exist: a dovish fed, a stable yield curve, and pending US-China trade deal. The bank thinks that stocks look like they did right after the 2015-2016 correction cycle, a period right before a big bull run.

FINSUM: We are starting to think that shares may have some good runway left. The correction in P/E ratios was a very healthy adjustment to end the year, and the macro situation is looking positive.

(New York)

One of the big outcomes of the huge rout to end last year was that stock pickers had reportedly gone back to doing what they did best—picking individual stocks based on fundamental value, signaling a diversity of holdings. However, in aggregate, that view appears to be hogwash, as new data shows that institutional equity ownership in stocks is at its highest point in years. Goldman Sachs follows this data and tracks how many companies are among the 50 most owned by hedge funds and mutual funds alike. Right now it is 13, which is the highest level since 2017. Industrial and tech stocks were the most held.

FINSUM: The most concentrated stock holdings are, the more risk there is for steep falls in those names.

(New York)

Stocks are in an interesting place right now. The year is off to a feverish start and momentum is strong, yet some are worried the rally has been too fast and that shares are vulnerable. Barron’s ran an article arguing the bull case for stocks. The core bull argument is that the economy is not as late cycle as many currently fear. While some think we are the very end, data and history suggest returns could be good. Based on a combination of economic signs (e.g. purchasing managers index) versus the recent market decline, stocks look poised for a great year (they are already well on their way). Macro indicators show the economy is still mid cycle, not at the end, such as private investment’s share of GDP.

FINSUM: We think the economy may be mid-cycle, but only if the Fed lets it be that way. The Fed can manipulate the economic cycle significantly, and markets generally follow.

(New York)

If history is any indication, the big surge in stocks that has started this year seems likely to continue. Markets have had a great week and the S&P 500 is up 11% on the year. Prices are only 5.3% off their all-time high. That bodes well because stocks tend to track their first two-month performance for the rest of the year. 64% of the time stocks continue to perform throughout the year just like they did in January and February. The last time the S&P 500 climbed more than 10% in January and February (1991), it rose an additional 14% for the year.

FINSUM: Stocks are in a sweet spot right now, with the Fed having backed off and trade fears easing. That seems likely to stay in place for a while, but we wonder if any stresses related to the 2020 election might start to weight on the market later this year.

(New York)

A lot of investors are nervous to put their money back in markets. The big losses of December have given way to a great start to the year, but investors are still shy because of the volatility. Well, JP Morgan says investors need to get back in markets soon as waiting for analysts to turn bullish again has a history of being a poor idea. Generally speaking, analysts can be a year behind actual market moves, so if investors wait until the mood improves, they will have already missed out on a lot of the gains.

FINSUM: Worries about forthcoming earnings aside, the market definitely has a renewed spring in its step and we are generally feeling bullish given the now lower valuations.