The IWM Russell 2000 ETF has risen for something like 13 days in a row. The desperate scramble into US equities is bordering on comical. It has been relentless. Writing any sort of pink ticket makes you look like a fool when half an hour later stocks once again push to new highs.
By now you know the story - the new US President will usher in a new wave of Reaganesque capitalism that will lift America out of this vicious deflationary balance sheet trap. Yeah, maybe he will. I don’t know, but more importantly, neither does anyone else. All you can do is place your bet and take your chances.
But one thing that does change is the price to make those bets.
I present two simple charts that suggest it might be time to ease off.
The first is the US stock market capitalization as a percentage of the world equity capitalization.
And the second is the 5 year treasury note yield.
Neither of these charts has broken out. I understand there are all sorts of other charts I could prop up here that show nothing but clear sailing ahead. But I think these two charts show the spot where this trend will at least take a break.
I have bought too many magical roses in my day. It never works as well you planned…
Thanks for reading,