Trick Or Treat

Think: “bigly” records. Here’s LPL Financial (this is from yesterday, but now it’s in the books):

  • Now that’s a win streak. Should the S&P 500 Index close higher on the month (it is up more than 2% with less than a day to go), it would be the longest monthly total return win streak ever going back to 1950. That’s right, the S&P 500 would be higher an incredible 12 consecutive months on a total return basis, which would top the streaks of 11 in 1954 and 1959. Here’s the catch, the S&P 500 is up 23% over the past 12 months, which is a lot, but by no means extremely stretched. In fact, going back since 1950, this would rank in the top 76% for all 12-month returns. Again, this has been a solid 12 months, but when putting things in perspective, the past 12 months haven’t been what we’d classify as an extreme blow off move; it has been more like slow and steady. It is important to remember that markets don’t peak when things are calm, we tend to see more volatility near ultimate market peaks.
  • Here’s a snap shot of the month (you can see the moment when the tech titans delivered upbeat earnings):


    Tech accounted for a disproportionate share of the market’s monthly gain. Have a look at this:


    Speaking of tech, this doesn’t say much for breadth:


    We’re back to “irrational exuberance”:


    But that’s fine because Shiller is “still in the market himself”:

    Apparently, Bloomberg’s Anchalee Worrachate is going as an asset bubble for Halloween. To wit:

    When I described my asset-bubble-themed Halloween costume yesterday, it wasn’t meant as a joke. While some may argue that central banks’ liquidity, which is still ample, will reduce the risk of financial bubbles bursting, many would agree that prices at current levels warrant caution. My colleague Srinivasan Sivabalan and I crunched some numbers and they showed:

    • Stocks: Several markets trade at or near their record-high price/book ratios (based on Bloomberg estimates), including Denmark, Kazakhstan, Lithuania, Latvia AND THE U.S.
    • Bond yields: Despite global growth accelerating, bond yields, as proxied by the Bloomberg Barclays Global Aggregate Total Return Index, are still close to a record low. At 1.61%, the aggregate yield is half its 20-year average and nearly 9 percentage points away from its peak.
    • Corporate bonds: U.S. credit spreads are at their tightest in three years.
    • House prices: One of the best way to measure house price affordability is to look at a house-prices- to-income ratio. According to IMF data, these are among developed countries where the ratio are above 100% as of the end of last year — Austria (130%), Australia (116%), Germany (114%), U.K. (111%), U.S. (106%), Japan (104%).
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    Author: Travis Esquivel

    Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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