There was a reminder recently by Josh Brown, the excellent market strategist on CNBC, of a phrase in Jesse Livermore’s “Reminiscences of a Stock Operator” which told of an old sage called the “Turkey” who when asked about the stock market’s future characteristically proclaimed “it’s a bull market you know.” In the past few years it certainly has been. No wonder. Massive annual fiscal deficits of 2 trillion dollars leading to accelerating inflation beginning in 2021 in effect created monetary ease despite a Federal Reserve supposedly tightening credit as it raised Fed Funds to 5¼% in mid 2023. Ease? It wasn’t really a tight policy until mid 2023 — just a year ago, that an unbiased observer could claim that the cost of money was anywhere close to restrictive.
That and an obvious burst of AI investment spending, accompanied by a continuing GDP fiscal deficit of 7-8% have provided fuel for the Turkey’s mantra. It has been a bull market post Covid. But now?
I’ve put together a list of positives and negatives that may help investors:
Bull Market Positives
- Job growth slowing but within normal historical ranges.
- China fiscal and monetary thrust.
- AI investment spending and potential productivity boost.
- Lower inflation close to Fed target.
- War ↑ spending.
- Momentum (It’s a bull market you know).
- Treasury 5–10-year yields lower by 125 basis since April 2024 peak.
