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With the past 3 days sending a shockwave of sentiment reversal around global markets, as first Powell then Trump double-teamed to stun bulls to the point where even grizzled veteran traders like Nomura's Charlie McElligott said that "That Was One Of The Most Manic 36 Hours Of Trading In My 18 Year Career", the question many traders are now asking, namely "was this the top" is unlikely to have a positive response, at least not yet.
The first reason why stocks likely have at least one more push higher before the "big fall" is that following the current wobble coming in a period of dovish central bank reversal (which needs a favorable market reaction to avoid being seen as policy failure) is that we will now see another wave of fresh Central Bank "capitulatory easing", with the danger of a ripping-rally thereafter even more clear when one considers the technicals, i.e,, "the amount of dynamic hedging Futures Shorts laid-out yesterday—as well as the fact that Equities funds were violently pressing their Shorts."
Reason - Morning - Bank - America - CIO
Another five reason come this morning from Bank of America's CIO Michael Hartnett who lays out "the case for further upside in risk assets", which are as follows:
1. There's no euphoria in global equities: YTD $152 billion in outflows from stocks corroborated by -0.8sd global equity underweight relative to 20-year history in BofAML Global Fund Manager Survey. In the same time there have been record inflows to bonds in in 2019 coinciding with another year of BofAML private clients adding to bonds; As a result, any hint of a late-summer pulse in the global economy leading to a rise in yields would drive rotation from cash & bonds to stocks.
Stock - Buybacks - Course - Record - Note
2. US stock buybacks: on course for record $823 billion in 2019: of note, corporations will for 2nd year running spend...
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To despair is to turn your back on God, you can never despair.