With continued uncertainty in global markets, here is a look at the big picture from around the world, including silver.
By Bill Fleckenstein President Of Fleckenstein Capital
November 15 (King World News) – Bond markets were a bit higher overnight, with the exception of Japan, which is now seeing its 10-year yield trade all the way “back” to zero. Equity markets more or less ignored the bounce in the same way they ignored the decline. My opinion is that when you have a big secular change like we’ve seen in the bond market it is easy for people to rationalize the first break lower and perhaps it will take a rally that doesn’t carry too far to get folks to feel uptight…
Blinded By the Bright Side
It is hard to know for sure, however, because we are talking about psychology, and the central bank actions over the last 20 years, especially the last 10, have rewarded people for essentially buying all news and being willing to suspend disbelief at the drop of a hat, which of course is what has gone on in spades since the election. As I keep repeating, equity investors are discounting all of the positives and none of the negatives while assuming a rapid timeline, all during a period when stocks are extraordinarily expensive and the trend in the bond market has likely changed. That is not a recipe for making money in equities in my opinion, but on the other hand I am not going to pick a fight with the stock market until the action changes.
Turning to the tape here, the reprieve in the bond market allowed the high-multiple stocks to have a nice bounce, and the Nasdaq gained 0.75% by midday while the Dow essentially took the day off and the S&P had a decent rally as well. With an hour to go, when I had to leave, the Nasdaq was 1.3% higher. The current view of markets seems to be: higher inflation, interest rates, budget deficits, stock prices, and a higher dollar. Can that all happen at once and be sustained?
Away from stocks, green paper was mixed, oil rallied 5%, the bond market was slightly higher, and the metals saw a bounce with silver gaining 0.5% to gold’s fractional gain of $3.