{"id":1104149,"date":"2019-03-07T15:52:32","date_gmt":"2019-03-07T15:52:32","guid":{"rendered":"https:\/\/dailyreckoning.com\/?p=106886"},"modified":"2019-03-07T15:52:32","modified_gmt":"2019-03-07T15:52:32","slug":"bull-market-or-bear-market-rally","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1104149","title":{"rendered":"Bull Market \u2014 or Bear Market Rally?"},"content":{"rendered":"

This post Bull Market — or Bear Market Rally?<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

After \u201cthe sharpest rally since the global financial crisis recovery\u201d \u2014 Goldman\u2019s phrase \u2014 has the stock market peaked for the year?<\/p>\n

Today we weigh the evidence\u2026 and hazard a conclusion.<\/p>\n

The major averages jumped over 20% from their Christmas Eve bottoms.<\/p>\n

The Dow Jones catapulted over 4,000 points valley to peak.<\/p>\n

The S&P, 450. And the Nasdaq, some 1,250 points.<\/p>\n

VIX \u2014 Wall Street\u2019s \u201cfear gauge\u201d \u2014 plunged from a menacing 36 to a kittenish 13 by March 1.<\/p>\n

\u201cThe bull is back,\u201d gloated the financial press. \u201cThe bears are back in hibernation,\u201d they exulted, putting out their tongues at skeptics.<\/p>\n

But as the sage Lao Tzu warned:<\/p>\n

The light that burns twice as bright burns half as long.<\/p>\n

This light is flickering\u2026 and fading.<\/p>\n

Today the major averages posted losses for the fourth consecutive session \u2014 their worst span since December.<\/p>\n

The Dow Jones gave back another 200 points today.<\/p>\n

The S&P surrendered 22; the Nasdaq, 84.<\/p>\n

So we ask:<\/p>\n

Was the historic bounce a mere spasm of a dying beast \u2014 a \u201cbear market rally\u201d?<\/p>\n

Financial journalist and analyst Mark Hulbert:<\/p>\n

\n

Rallies in excess of 20% during bear markets are hardly unprecedented. In each of the 2000\u20132002 and 2007\u201309 bear markets, for example, both the S&P 500 and the Nasdaq Composite rallied by more than they have recently \u2014 only to eventually succumb to the bear market that remained in force.<\/em><\/p>\n<\/blockquote>\n

More:<\/p>\n

\n

During the bear market that lasted from March 2000\u2013October 2002, for example, the S&P 500 experienced a rally in which it rose 21%; in its biggest rally during the October 2007\u2013March 2009 bear market it gained 24%. Both rallies were larger than the one this benchmark has experienced since its Christmas Eve low.<\/em><\/p>\n<\/blockquote>\n

Morgan Stanley subscribes to the bear rally theory. It has been \u201cselling the rally\u201d \u2014 not buying.<\/p>\n

Returning to Goldman, its analysts believe the market\u2019s recent highs could well be the year\u2019s highs.<\/p>\n

It appears there is justice here.<\/p>\n

Before its recent slippage, the S&P was already up some 15% on the year.<\/p>\n

A 15% annual gain for the S&P is pretty handsome.<\/p>\n

Its average annualized return stretching 90 years is a workmanlike but unspectacular 9.8%.<\/p>\n

And over the past 20 years?<\/p>\n

You may wobble at the answer:<\/p>\n

4.5%.<\/p>\n

Yes, it is true \u2014 2017 turned in a 19.7% gain.<\/p>\n

And 2013 yielded a wondrous 29.6% return.<\/p>\n

But these years we find at the margin, far beyond the general.<\/p>\n

Also in recent years:<\/p>\n

2018\u2019s 4.4% loss. 2015\u2019s 1.4% gain. 2011\u2019s 2.1% gain.<\/p>\n

If the S&P can scratch out a 15% gain this year, it would be a job jolly well done.<\/p>\n

Especially, that is, in context of unfurling economic conditions.<\/p>\n

As we have documented to the verge of exhaustion, growth is winding to a halt.<\/p>\n

GDP trends in the wrong direction. The consumer sags and groans under record debt. Retail stores close at alarming rates. Construction wallows.<\/p>\n

Et cetera, et cetera.<\/p>\n

Yesterday\u2019s reckoning, in summary:<\/p>\n

\n

Debt delinquencies are at unprecedented levels, bankruptcies are soaring, retail stores are closing at a record pace; this is the worst economy for farmers since the early 1980s, exports are plummeting and a brand-new real estate crisis has now begun.<\/em><\/p>\n<\/blockquote>\n

Meantime, unemployment is beginning to slink higher\u2026 like a choking vine.<\/p>\n

The Federal Reserve evidently agrees.<\/p>\n

Why else would it suddenly transition to \u201cpatience\u201d?<\/p>\n

Before December\u2019s near-bear market Jerome Powell was implacably and resolutely determined to raise interest rates and hack the balance sheet.<\/p>\n

But the market read him a severe lesson\u2026 and Mr. Powell saw the light.<\/p>\n

Unfortunately it could be the headlight of a locomotive barreling toward him…<\/p>\n

Monetary policy runs to a lagging 12\u201318-month schedule.<\/p>\n

The combined effects of previous rate hikes and balance sheet gougings may finally be working their mischief.<\/p>\n

Powell could cut rates once again \u2014 fed funds futures suggest a nearly 20% chance of a rate cut by next January.<\/p>\n

But recall the 12\u201318-month policy lag.<\/p>\n

Like Custer at Little Bighorn, reinforcements would not arrive in time.<\/p>\n

And as we have explained previously, recession almost always follows the first rate cut after a hiking cycle.<\/p>\n

By then\u2026 it is too late.<\/p>\n

We cannot be certain recession will come calling this year.<\/p>\n

But we hazard the stock market will not end 2019 much above its recent highs \u2014 if it ends 2019 higher at all.<\/p>\n

Regards,<\/p>\n

Brian Maher
\nManaging editor, The Daily Reckoning<\/em><\/p>\n

The post Bull Market — or Bear Market Rally?<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

This post Bull Market — or Bear Market Rally?<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

The post-Christmas surge has been “the sharpest rally since the global financial crisis recovery”… Why the stock market may have already seen its highs for the year…<\/p>\n

The post Bull Market — or Bear Market Rally?<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n","protected":false},"author":16,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[714,484,1911,366,463],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1104149"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1104149"}],"version-history":[{"count":1,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1104149\/revisions"}],"predecessor-version":[{"id":1104150,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1104149\/revisions\/1104150"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1104149"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1104149"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1104149"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}