Market Movements: From Taking Stick to Dangling Carrots
It seems like we’ve operated so long under the "motivation by stick” method that we can’t seem to grasp how the "carrot method" works anymore.
By example: Fiscal policy in the Bush years became a secondary consideration following the events of 9/11. But before 9/11 all anyone remembers is: the crash of 1987 and the tech bubble bursting.
Our fears have completely covered what happens to an economy that is actually being formatted, induced, incentivized and unleashed to grow.
The amnesia effect of these events may need more time to wear off as fears only escalate with higher prices in the markets.
Take a look:
How About That Fear?
We’ve seen this before.
It’s the BAML sell-side sentiment reading and Wall Street's view of how you should be exposed to equities.
The green line (above) is a buy, and the red line is a cautionary tale.
As at the end of November, with just a couple weeks to respond to new potential under the Trump team, this indicator shows these guys and gals are still at the same levels seen back at the 1998, 1995 and 1989 lows!
And all those good feelings about equities are still lower than they were in March of 2009; almost 13,000 Dow Jones points ago.
Now that requires a paradigm shift - and a stiff drink - to even begin to understand why.