northmantrader.com/2019/02/15/bears-are-right/
After 8 weeks of none top rallying the bear mocking is back which is ironic. Why? Well, because bears are right. About what? Well, everything. Yes stock markets have been screaming higher in recent weeks on hopium and central banks turning dovish, but ironically that’s as a reaction to bears being right. How can that be?
Go back to just a year ago. Global synchronized growth. Bears said that was BS. And they were right. We now have slowing growth everywhere.
Deutsche Bank has now reduced Germany’s 2019 GDP forecast to 0.5%
Even the US is no longer is immune. Yesterday Atlanta Fed dropped its Q4 GDP estimate to 1.5%, today the New York Fed dropped its Q1 GDP estimate to 1.08% a few minutes ago. Down from 2.17%. That’s a cut in half. Long gone are the calls for 3%-4% GDP growth.
Retail sales was a disaster for December and Industrial Production growth turned negative 0.6% for January. Bulls did not predict this last year or even a few days ago. Bears said things would turn sour. And they were right.
Tax cuts were supposed to bring all this new growth. Bears said that was BS. And they were right. The growth barely lasted 2 quarters.
Bulls said 2018 would end on new highs. It didn’t. Bears said markets were setting up for a massive correction. And they were right.
So why are markets rallying non stop now as if nothing ever happened?
For the same reason they have been over the past 10 years: Easy money. China is throwing free money around in record numbers:
The US Fed capitulated and is now not hiking rates and each speech is a dovish speech. Today the ECB’s Coeure signaled the ECB perhaps bringing in more cash for banks by starting their TLTRO program again. They are actually discussing this only 6 weeks after ending their QE program. The BOJ’s Kuroda has just stated it’s his duty to keep the BOJ’s interventionist policy going. His duty.
In short: The tightening cycle ended before it really started. Bears said central banks could never normalize. And they were right...