Federated Investors portfolio manager Steve Chiavarone’s prediction about this bull market was ringing pretty loudly a few months ago.
Back in November, Chiavarone said this bull market has at least 10 years left to run, thanks to a big move by millennials into equities.
“The risk is not being in this market,” Chiavarone said at that time, when his firm’s price target was for 2,750 on the S&P by the end of 2018 and 3,000 for 2019.
Over the weekend, Chiavarone was back at the prediction wheel, with a CNBC interview in which he highlighted the mountain of greed out there, chiefly in cryptocurrencies. His words caught the eye of the anonymous blogger behind the Heisenberg Report , who delivered this ominous warning: “When you lose Steve…”
Specifically, Chiavarone described this wacky action we’re seeing in crypto these days as follows: “It’s the first sign of greed since the Great Recession.”
Chiavarone, who is a bull on the actual blockchain technology, believes there’s a good chance bitcoin will suffer the same fate as Pets.com, yet the “greed” with which investors are approaching cryptos actually bodes well for stocks.
Wait, so greed is good?
“It’s indicative of rising risk appetites, which will drive equity markets higher almost regardless of what happens with bitcoin,” Chiavarone said.
This logic flies in the face of what some, including Deutsche Bank’s Torsten Slok, have said about the potential negative impact a crash in digital currencies could have on equities — and the confidence of burned retail investors.
For Chiavarone, however, there’s just too much right in the stock market now for it to get derailed by an exodus from cryptocurrencies. “When you look at pick-up in economic growth, the full impact of the tax reform boost, [and] the earnings number, you’ve got to pull your target up to match it,” he said.
Hence, in an update to his S&P
price target that earns our call of the day, Chiavarone now sees the S&P hitting 3,100 by year end.
That call’s off to a mixed start. With the government shutdown hanging over investors, stocks are bouncing around breakeven territory early.
Key market gauges
reversed early declines to push slightly higher. The S&P and the Nasdaq
are up a bit as well. Gold
is mostly flat, as is crude
managed to shake off shutdown worries. Europe
is meandering. The dollar
In cryptos, bitcoin
is under pressure again, moving well below the $11,000 in recent action. Read: Market Snapshot.
“Negotiating with this White House is like negotiating with Jell-O. It’s next to impossible. As soon as you take one step forward, the hard-right forces the president three steps back” — Democratic Senator Chuck Schumer of New York, talking about what led to the government shutdown.
The next move for shares of General Electric
will be under scrutiny following last week’s 14.5% drop, the biggest five-session losing streak since 2009. As the stock falls further behind its peers to multiyear lows, the risk of it snapping its record 110-year run within the Dow
Keep an eye on Apple
which is easing off just a bit this morning. Asian suppliers got a little rattled by reports late last week of weak demand for the iPhone X and the possibility of a production cease by summer.
On the earnings front, Netflix
quarterly results are coming after the close. Check out our preview here.
The guessing game is still going strong on where Amazon
will build its second headquarters. There’s no shortage of opinions on where it will — or should — be. Here’s one that’s building the popular case for D.C. Gambling website Paddy Power says the odds-on favorite, however, is Boston, followed by Atlanta. Read:why college students should pay attention to Amazon’s HQ2.
Hundreds of demonstrations over the weekend marked the first anniversary of the women’s marches organically formed in early 2017 in protest of Trump’s surprise presidential win. This time, however, there was a new mandate: to influence electoral politics, with much of the messaging including voter participation and support for would-be candidates. Like last year, social-media was abuzz with images like this:
— Nathan Tigges (@theycallme_tigs) January 20, 2018
88.4 — That’s the RSI (relative strength index) reading the S&P just flashed. When’s the last time that happened? Never, according to Zero Hedge. “The S&P 500 is up 8 of the last 9 weeks, 16 of the last 19 weeks, and 15 of the last 15 months (and 22 of the last 23 months — since The Shanghai Accord),” the blogger wrote. “The S&P has NEVER been this over-valued, NEVER been this overbought, and NEVER gone this long without even a minor correction. Never… is a very long time.”
The stock market has hit another milestone in tranquility, with Friday’s close on the S&P 500 marking the 395th session in a row without a 5% drop. Goldman put the record in perspective with this chart:
As you can see, the average time between such dips is less than 100 days. Clearly, the short volatility trade continues to print money for investors betting on smooth sailing despite the turmoil in Washington.
Bill McBride of the Calculated Risk blog explains that there could be delays in economic reports in the coming days. “If the shutdown doesn’t end quickly, several agencies will probably not release regular government reports,” he wrote over the weekend. “For the coming week, the December new home sales, the durable goods, and advance Q4 GDP reports will probably be delayed.”
Private data, like existing home sales later this week, will still be released on schedule, as will all data from the Fed, he said. If the shutdown persists, however, McBride noted we might not get a timely peek at the closely watched jobs report next week.
Blowing your entire fortune, the Nicolas Cage episode.
This CIA analyst wrote a book while she was on maternity leave.
Richard Branson on shortening the five-day work week.
A roadside test to catch dope-smoking drivers?
As hard as it might be, perhaps it’s time to give Trump credit where credit is due. Or, you could take the Michael Wolff route and talk about the White House philandering he claims is taking place right now:
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