http://themacrotourist.com/images/Azure/JesseFelder.png

One of the guys I follow on Twitter is an ex-Bear Stearns guy who now writes his own newsletter. He is a smart shrewd fellow, and even more importantly, he makes me laugh. His name is Jesse Felder and last fall he decided he wouldn’t shave until the stock market experienced a 10% correction. Think about it as a playoff hockey beard if you may (for my non-Canadian readers, NHL players often don’t shave during the entire playoffs and by the time they get to the Stanley Cup finals, there are some pretty burly looking players). Well, even the NHL playoffs don’t last as long as the market has managed to go without a 10% correction. I am actually a little worried about Jesse as the picture above was taken in February, so he has another two months of growth since then, and the stock market is still miles away from a 10% correction.

But Jesse’s bearded quest has a silver lining. We can use it as the ultimate timing tool. I wish I had thought of it, but another one of the guys I follow on Twitter realized it first.

http://themacrotourist.com/images/Azure/ShaggyMay0115.png


Why can’t they both go down together?

It’s Friday and I will keep today’s post short and sweet. But I want to leave you with something to think about for the week-end.

Over the past half a dozen years, the bond market and the stock market have both rallied together.

http://themacrotourist.com/images/Azure/SPYMay0115.png

Why can’t they both go down together?

Ever since the credit crisis of 2008, the weaker the economy has been, the more stimulus Central Banks have applied, which has caused risk asset prices to rise. It is a perverse response that stock markets rally on bad economic news as they correctly assume more Central Bank stimulus.

But what will happen if the economic news picks up?

The bond market is already starting to sniff out a real economic recovery. The stock market bulls might be surprised at how poor all financial assets (including stocks) perform in a real economic expansion.


Speaking of economic expansion

They say that copper is the metal with a PHD in economics. Well, if that is the case, then an economic expansion might be just around the corner.

Yesterday as the US dollar was rallying hard and they were knocking the stuffing out of gold and silver, copper was quietly rallying.

http://themacrotourist.com/images/Azure/HGAMay0115.png

Copper should have been down with the other metals, but it was strangely strong. Maybe just like the bond market, copper is sniffing out a coming economic expansion.

Thanks for reading and have a great week-end,

Kevin Muir

the Macro Tourist