07-02-2014, 10:15 AM
Just some things I've been thinking about with the market once again hitting new all-time highs.
1. Many commodities are trading near recent year lows, especially the grain markets but also things like cotton, silver, lumber and copper. I remember back in 2008 before the last recession, nearly all commodities were at or near all-time highs. While oil is solidly above $100, its not out of norms considering the turmoil in the M.E.
2. With the exception of some of the high-flying stocks (NFLX, TSLA, UA, etc.), the market really isn't trading at crazy levels. Many large cap tech, oil, and materials stocks are trading near or below historical valuations.
3. Interest rates continue to stay low, meaning the flight to higher yielding treasuries and bonds doesn't appear to be happening anytime soon.
4. Employment and housing continues to slowly improve, which, along with the booming energy and industrial sectors, should continue to provide a tailwind to corporate profits. The low commodity prices I mentioned above should also help many companies profits in the second half of the year.
All in all, I still don't see any near-term reasons why the market won't continue to march higher. Other than a few tech and fad stocks, prices really aren't irrationally high and there seems to be plenty of seeds around for more growth. Of course, there is always the potential for a black swan, most likely coming from the Middle East, but, other than that possibility I think we continue to slowly move higher in the second half of the year.
1. Many commodities are trading near recent year lows, especially the grain markets but also things like cotton, silver, lumber and copper. I remember back in 2008 before the last recession, nearly all commodities were at or near all-time highs. While oil is solidly above $100, its not out of norms considering the turmoil in the M.E.
2. With the exception of some of the high-flying stocks (NFLX, TSLA, UA, etc.), the market really isn't trading at crazy levels. Many large cap tech, oil, and materials stocks are trading near or below historical valuations.
3. Interest rates continue to stay low, meaning the flight to higher yielding treasuries and bonds doesn't appear to be happening anytime soon.
4. Employment and housing continues to slowly improve, which, along with the booming energy and industrial sectors, should continue to provide a tailwind to corporate profits. The low commodity prices I mentioned above should also help many companies profits in the second half of the year.
All in all, I still don't see any near-term reasons why the market won't continue to march higher. Other than a few tech and fad stocks, prices really aren't irrationally high and there seems to be plenty of seeds around for more growth. Of course, there is always the potential for a black swan, most likely coming from the Middle East, but, other than that possibility I think we continue to slowly move higher in the second half of the year.