One of the great disconnects for investors over the past few years revolves around the resiliency and determination of US Equities in the face of what would traditionally be headwinds. A muted economic recovery? Buy stocks. End of QE? Buy stocks. Stronger Dollar? Buy stocks. Oil price swoon? Buy stocks. You get the point.
It’s as if the market has been flipped on its head.
Last week I was interviewed and quoted in the NY Daily News on the recent Jobs Report. I spoke about several items, but here’s what made it to print:
“A stronger jobs report signals a stronger economy,” Andrew Nyquist, president of See It Market, told the News.
“This is particularly good for stocks heading into the holiday season as investors look for a ramp-up in holiday sales and a stronger consumer.”
This made for a good quote and highlighted investors hopes for the holiday season. But perhaps it’s what didn’t make it to print that bears more importance to the macro situation going on in the global markets:
“Another huge factor is the economic slowdown in developed geographies such as Japan and much of the Euro Zone. This is pushing global investors to look for new places to rotate funds into. And with this in mind, the US looks pretty darn good.”
I hinted as some of these themes in my 2013 post about why investors are eating US Equities for breakfast. Here’s a couple more thoughts to expand upon this theme:
- Global investors put money where they believe it will perform the best. And with several developed nations towing the recession line, the Middle East getting hit by lower Crude Oil (WTI – Quote) prices, China struggling, and Russia dealing with sanctions and economic woes, investors are (and have been) choosing to put money to work in US equities.
- The US Dollar is a standout when compared to other competing currencies due to the issues above. I believe there is still a sovereign debt crisis and that it is percolating under the surface. Yes, I am concerned about our debt, political system, monetary policies, and social patterning. And because I love my country I want to see true structural reform for the better. But my concern on these items doesn’t mean that they are manifesting right now.
That said, active investors need to follow their given disciplines and time frames. Yes, the market is volatile under the surface and showing some cracks. But it is the resiliency in the face of traditional headwinds and fundamental indicators that has been telling investors for the past few years that capital is shifting/flowing towards the US for many of the reasons that I laid out above.
Perhaps this is why the October swoon in the S&P 500 (SPX – Quote) was bought up so quickly. The V bottom recovery didn’t look/feel healthy, but it provided another round of ‘food for thought’ on capital flows. We are not just investors, but global investors. Remember to follow the money. Trade safe.
Follow Andrew on Twitter: @andrewnyquist
The author holds both long and short exposure to S&P 500 related securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
