such a highly paid group of professionals the great and the good of the financial markets have been behaving in somewhat lemming-like fashion once again.
Rather than judging important allocation decisions based on economic and stock fundamentals, it’s been more about “will they or won’t they”.
There we were, for example, in the early part of last week marching up to the top of the hill on the prospect of “fairly soon” action from the Fed unless the data improved and by the end of the week, according to the latest FOMC minutes, we had traipsed back down again as James Bullard told CNBC those minutes were “a bit stale”.
Leading the charge for the bears are the Bob Janjuahs of the world. To recap, Janjuah of Nomura thinks between now and November the S&P will move from its current level to 1,000-1,100 or between 300 and 400 points lower. There’s lots of reasons including weak global growth, too much monetary and fiscal stimulus optimism, US fiscal cliff ramifications being built into corporate earnings numbers and the US drought, along with other weather-related shocks, creating food price inflation. All very jolly stuff.
The good news for the longs though is for every yin there’s a yang, and number crunching from Piper Jaffray’s Technical Research team makes them think that conditions are now right for a new bull market to emerge and the S&P to break 2000-2007 highs.
So for those of you who want a clear direction for equities after over a decade of being stuck in a range there’s something for everyone. Enjoy the ride!
Steve Sedgwick, Anchor, SquawkBox Europe, CNBC