My apologies to the late Charles Dickens for ripping off the segments of the opening line of his classic, “A Tale of Two Cities.” Essentially, that is what I got this week on the front page of Barron’s Magazine (a tale of two markets): Jack Willoughby’s “Dow 1600!” and Randall Forsyth “Up and Down Wall Street” column, “A Deflation wave.”
Interestingly, at least on a short-term basis, the “Dow 1600!” article was a bit more disconcerting than the negative “a Deflation Wave” story. Why? Whenever you see an obviously bullish headline like this on the front page of a national news magazine, it raises all sorts of red flags. I would have preferred Dow 1300. Importantly it is not too brazenly bullish as we are only 10% away from that target and, reading the fine print, it is a target for the Dow a year out.
The article emanates from a nationwide survey done by Barron’s that solicits the opinions of 135 institutional money managers. The majority of the respondents (74%) were bullish, some citing a new acronym as a reason for their optimism. The acronym is TINA, standing for there is no alternative. They also cited the fact that many of their clients are still very fearful, even in light of the fact TINA is a work.
Admittedly, the article supports many themes and concepts already explored in my blog. What is worrisome is that 74% of the respondents were ‘bullish’ or ‘very bullish” vs. a scant 7% bears. Even though the author gives some brief stats on the past results of the survey (see p. 1), it is really not much help in ascertaining the predictive value of the work. In the absence of other strong evidence, the preponderance of bullish feeling in the survey gives the contrarian in me pause to think that maybe that correction is much closer than we think. It raises red flags, because in my world the consensus is generally always wrong. One caveat, this sample was very small.
On the flip side, Randall Forsyth’s piece, “A Deflation Wave” gives me cause for hope; and it shows Barron’s to be “Fair and Balanced.” This article goes into the break we saw last week in commodities and gold. The piece cites several reasons without going into what I perceive was the real catalyst (a miniscule miss on Chinese 1Q GDP). See session 26, “The Trifecta….” for more detailed comment.
What do you think?
- PS Here are some headline bullets from CNBC’s mobile edition taken Sunday night April 21. I hope this does not scare you too much.
- “Earnings Results flashing Warning Signs For Stocks.”
- “A Make-Or-break Week Ahead for the Stock Market.
- “Change on Tap: Consumer Stocks May Lose Fizz.”
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