The market has become “too healthy”

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The U.S. stock market rose 8% in three weeks, slightly less than half of the S & P 500 index last year. January is the twenty-second month of the past 23 months with a higher total market return. With the possible addition of cryptocurrencies and U.S. Treasuries, it is almost impossible to do anything today.

Jordi Visser, CIO at Weiss’s multi-strategy consultancy, said: “I expect the market to be reminded of the risks.” We’ve become complacent and I think it’s time to let people remember that the market has been declining, at least in the short term. ”

Vetse actually interviewed at yesterday’s noon deal. It seems prescient to see the Dow and the S & P lower by more than 370 points. The last major decline on January 16 dropped 287 points from start to finish.
Yesterday, the S & P 500 was the worst day of the year – down 0.7% at the close.

Prior to this, the Morgan Stanley World Index and the S & P 500 entered the longest bull market, no more than 5% correction.

Strategists from Goldman Sachs recently stressed that a 10% risk of a correction in the stock market may be interesting headlines and topics, but unlikely to disrupt the economy. The market is neutral in the worst case

According to Goldman Sachs, the average bullish correction for equities over a four-month period was 13%. The Dow rose 87% in the last five years, while the MSCI Emerging Markets Index gained only 14%.

Bonds have felt the impact of the sell-off.

The yield on the 10-year US Treasury note rose to a 2.73% high on trading, the highest level since April 2014, before the quarterly reimbursement was released on Wednesday. Bonds in Germany and Japan have similar price adjustments. High yields mean lower bond prices.

“Rising bond yields are a time bomb,” said Naim Aslam, chief market strategist at Forbes and ThinkMarkets in London, said Forbes copywriter. “The high inflationary expectations stimulated by Trump’s tax incentives need to be taken into account and the market has decided to remind the idea because companies will raise wages and bonuses and bond sales are panicking investors.
Tomorrow’s Fed’s monetary policy meeting is one reason for the sell-off today. Neil MacKinnon, a senior economist at VTB Capital in London, said the meeting of the Federal Reserve was the last meeting of Janet Yellen as Fed chairman and the market expected the meeting to be ” Hold “over.

If the stock sell-off continues, most of the Fed’s talk tends to be tough, so investors should expect Trump to add fuel. Interestingly, the name of Jon Williams, the president of San Francisco, was added to the mix of candidates to become the next Fed vice chairman. Williams said in October it believes the current neutral rate of federal funds and excess reserve rates is around 2.5%, which could provide a tough ceiling for most of 2018. Bretton Woods today said in a note to clients The report wrote.

Vladimir Signorelli, founder of Brettonwoods, said: “The Fed may try to use interest rates to grow further as both economic growth and inflation will rise, but for the moment we do not worry.

In general, we are still constructive about stocks.

The global economy is doing well.

China is growing stronger. Brazil is getting out of the woods Asia as a whole is growing.

But the core economies are driving most of the sentiment, especially in the United States. Investors and business executives continued to say that from a positive outlook, regulatory rollbacks and corporate tax reliefs.
In Europe, initial estimates of GDP growth in the euro area show another strong quarter. The annual GDP growth rate of the euro zone has risen from 1.8% in 2016 to 2.5% in 2017, with Germany as the leader. This is the fastest annual growth rate in Western Europe since 2007.

Some investors are wondering if the European Central Bank may exit QE as early as September, especially as France and Spain have returned to growth.

“No one is negative,” Wieser said. “I think the biggest fear now facing me is that we see a bigger adjustment will not be too great. As a company, we are seeking to change our position. The work of the past two years may not work in the same way.” He said. He said: “Now I like oil, I like the limited partner of the energy guru, I like Mexico, although I’m worried about what happens to the North American Free Trade Agreement and I still like Japan.” This is Visser’s favorite pick last year. MSCI Japan rose about 24% in 2017.

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