Are we poised for an economic explosion?
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Joshua M. Brown Guest blogger
Let me set the scene for you:
* There is a聽Debt Deal聽in the works that removes the ceiling and related draconian cuts from the discussion til at least February. Out of sight, out of mind.
* There is聽no election聽this fall.
* There is聽no war聽with Syria and high level talks are happening with Iran for the first time in decades.
* The incoming Fed Chairperson is the most dovish in the institution's 100 year history. There will be聽no taper talk聽whatsoever so long as employment data remains muted. At least not this quarter and probably not until the spring barring a huge tsunami of good economic data.
* Stock markets around the world are selling at聽fair to absurdly cheap valuations.
* The banks are as聽highly capitalized聽as they have ever been.
* Home prices are back to long-term trend and appreciation continues despite recent mortgage slowdown -normalization聽being the operative word.
* US households reclaimed the 2007聽peak in total net worth聽and have now surpassed it.
* Small and mid cap stocks are at聽all-time highs聽and yet still under-owned by the largest pools of capital in the US - pensions, endowments and insurance companies.
* Going back 110 years, when聽the Dow聽has been up in the first half, it's finished the year strong with gains in the back half 70% of the time.
* Hedge funds are at their聽highest net short positions聽since January and have massively trailed every equity benchmark you can think of.
Thats the set-up going into year-end.
What happens from here? 聽My guess would be that we have all the rocket fuel we need for an explosion.
Your thoughts?
