The State of the Markets:
My quote system confirms that stocks finished higher on the week and that the S&P 500 gained ground all five days last week. And with the venerable index closing Friday at the second highest level ever on a daily basis (and the highest ever on a weekly basis), one can't be blamed for being enthused about the action.
However, I am struggling to get overly excited here and I wouldn't call the recent rally robust, as the intraday action seems to be driven more by the hopes that the trade war with China will come to an end soon than a rush to buy stocks. For example, take a look at a chart of the small caps last week - can you say sideways? And then there is the chart of the banks - ugh.
Yes, there is some good stuff happening in the market. But I guess my primary point on this fine Monday morning is that there is also some bad stuff to be found, as well as some downright ugly stuff. So, in an attempt to remain objective, I'm going to take a quick run through the good, the bad, and the ugly here.
The Economy/Earnings: Unless you've been sleeping in a cave, you can probably spit out the bull case pretty quickly. First and foremost, as the saying goes, "it's the economy..." Then there is the fact that earnings are at record highs - and expected to continue to grow.
In reality, these two issues alone are probably enough for the bulls to maintain possession of the ball and likely the reason that the major indices are within spitting distance of all-time highs - despite all the worries out there.
When one digs into the economic data, it is ...