Stocks opened lower. The Dow is currently down 25 pts and the SPX is down -.2%. Semiconductors and energy are moving higher, along with biotechs. On the other hand, gold miners, retailers, telecoms and REITs are lower in early trading. The VIX Index is down under 11 today and VIX August futures are trading around 12.6. European markets are poised to close slightly lower today although most of Asia was higher overnight. WTI crude oil is trading up toward $44.73. Treasury bonds are trading modestly lower today, and I actually saw a headline proclaiming that investors are spooked by higher rates. That’s sounds ridiculous when you consider that the 10-year Treasury yield has risen to a mere 2.38%. That can only be considered high if your chart only goes back 4 weeks. The bears can’t have their cake and eat it too. In other words, you can’t bemoan low rates as a consequence of slow economic growth and weak inflation expectations, but then declare that the market is afraid of rebounding rates as economic data begin to look a little better.
In a CNBC interview yesterday, Brian Belski of BMO Capital said we are eight years into a 20-year bull market. Therefore, even if you consider that the market may be temporarily fully valued, or that we may get a pullback in the summer, the long-term investment thesis on the stock market is intact. Separately, Tony Dwyer of Cannacord Genuity believes the economic cycle isn’t over. And he reminds us that every single correction outside of a recession is an opportunity to buy stocks. His advice, based on a historical analysis of market cycles, is that “you buy it until you invert the curve and shut down lending.”
Finally, on his show Mad Money last night, Jim Cramer said too many investors simply don’t believe in this market rally. He listed the reasons:
1) The bull market has lasted too long
2) We’re building to another dot-com bust
3) The Federal Reserve is tightening monetary policy
4) The Trump Administration can’t seem to deliver on its promises
5) Stocks are too expensive
6) Tech stocks have run too far, too fast
7) Misunderstanding of the opportunity in healthcare stocks
8) Disappointment in energy stocks
9) The entire retail industry is in flux
10) Tepid commentary by Wall Street analysts
Mr. Cramer spent some time refuting each of these points. His view is that you shouldn’t look at the stock market in terms of the S&P 500 Index or the Dow Jones Industrial Average, but instead in terms of sectors (like technology or healthcare) or individual stocks. He says he finds value in plenty of corners of the market.