Thought of the Day

When Corporate spreads are below moving average, probably going down you make the most money in equities when it's above like now it starts to be dicey. I will pay attention to this.

but sometimes this is an early signal

in 2002 spreads were starting to go down because economy was in trouble and stocks lost 23% (s&p )
spreads start going up in 2006 and 2006 was still ok equities up 13%
spreads are going up in 2018 and i think it's still ok

From Bloomberg:

Greek pensioners have seen their payouts slashed so much, some of them are moving to one of the poorest countries in Europe.
Take George, 75, for example. After his wife died five years ago, he rented out his apartment in Thessaloniki, the country’s second-biggest city, packed his bags and moved to Sofia, Bulgaria’s capital, where he says his monthly 800-euro ($905) pension allows him to “live like a king.”
“Of course there are difficulties with adjusting and friends,” said George, who didn’t want to give his surname, fearing he’ll be pursued by Greek tax authorities. “But with the money I have, I can return to Greece often, and I also have the opportunity to travel.”
Greece, which is among retirement destinations for other Europeans, is finding its own citizens -- like George -- are now looking to live out their senior years in the country’s cheaper northern European Union neighbor after seeing their pensions cut at least 20 times during its protracted debt crisis.

I think we have the conditions to reach the all time high in November. there is going to be a rush to buy, lot's of people are behind now.

after that we might have the melt up scenario in 2019.

Gridlock may prove better for markets than if Republicans had got another clean sweep.

Gavekal

I think it’s to earlier to say what is going to happen. The markets are in a delicate position more red is very dangerous. The benign scenario is that we bottomed 28 October and we go up from here. Often markets don’t like uncertain and the elections are behind us, it really doesn’t matter who wins just the fact that it’s over is a plus. The coast is not clear yet. My scenario is still a melt up in 2019 but I keep my eyes open. If it goes up I buy if it goes down I sell.

I saw a study ( stat ) that the market goes up much more in the days congress is not in business than the days they legislate. The markets don’t like new laws . the best would be for politicians to stay still and quiet.

Singer found that in aggregate, the S&P 500 Index performs better on days both houses of Congress are out of session versus days when both houses of Congress are in session. There is also a decrease in volatility as measured by standard deviation.^[1]

Congressional effect management found that the S&P 500 Index had a daily annualized price appreciation of 0.31% on days Congress was In session from January 1, 1965 to December 31, 2008. Over that same time span there was a 16.15% annualized price gain on trading days Congress was Out of session.

IF QE was very bullish for the asset prices the end of QE from mid 2019 should do the opposite? As you know i think we might have a climax before the end! a melt up. i don't see euphoria in this bull run.why should equities go up?because good times bring more good times in a Virtuous cycle

From Chris Solarz, Cliffwater Weekly Macro News