Weekend Sep-t 29 2013
Note to readers, this is our weekly news paper column which apears in two West Texas Newspapers.
A New Bull Market in Stocks?
Today there are two and half leaders in the world. One is Recep Tayyip Erdogan, the second is Putin, and the other half is Obama.
Yigit Bulut, Erdogan adviser in Turkey
Some pundits declare we are in a new bull market for stocks.
There is a serious lack of parallels to the start of the bull market of 1982-2000.
From a technical standpoint, the United States stock market has a clear pattern of alternating eighteen year cycles. Bear market cycles were the norm from 1893 to 1911, 1930-1948, 1966-1984, and currently from year 2000 presumably to 2018. Bull cycles alternated from 1912-1930, 1948-1966, 1982-2000. We allow a two year transition from 1982-1984.
Bear cycles typically exhibit negative emotion in the form of war, domestic violence, and political gridlock. Typically the stock market ends an 18-year run where it began. Bull cycles exhibit positive emotion with the lack of war, decreasing crime, political compromise, and a huge run up n stock prices.
The bull market of 1982/4-2000 began with interest rates decreasing from double digit to low single digits. The lack of easy money in bonds and CDs drove money to the stock market. That is certainly not the case now. Interest rates have begun to increase with some preferred and municipal funds already sporting 7% yields. While bulls claim higher rates indicate a stronger economy, it is hard to see how higher and higher rates will not cause investors to be content with safer bond yields than stocks.
The period since 2000 has offered up two bear markets, 2000-2003 and 2007-2009 and two bull markets 2003-2007 and 2009 to now. This is typical of past bear cycles. With the market at new highs, it would be logical to expect some sort of pullback ahead. Bull markets rarely begin at new highs.
But most of all, bull markets are exhibitions of positive social mood. Inclusionary actions like Clinton’s Oslo peace accord are the norm.
The Iran hostage crisis ended the day Reagan was inaugurated. Last week, while Obama declares Al Qaeda is on the ‘path to defeat,’ but that very group murdered 67 people in a Nairobi shopping mall. Terrorists have now released a video, ‘Minnesota Martyrs’ detailing three Americans giving their lives for Al Qaeda. By the way, Tom Clancy’s novel, The Teeth of the Tiger, features just such an American shopping mall attack with Muslim terrorists gaining US entrance with the help of Mexican drug lords. It could happen here.
And then there is a string of exclusionary events. While Reagan ended the hostage crisis on day one of his Presidency, a year later no one has been brought to justice for the Benghazi murders.
It has become more and more apparent that the IRS deliberately targeted Tea Party groups at the behest of the President. The central figure, Lois Lerner, quietly retired from government service last week.
No one has been brought to justice over the Fast and Furious gun running program to Mexico.
It is surely game set match for Obama and Kerry in Syria. Their peace deal to discard chemical weapons now has Assad demanding one billion dollars US to do so. Surprise, surprise…
At the UN this week, Iran President Hassan Rouhani refused an offer of a meeting and photo op with President Obama. This is quite the opposite of the Oslo accord mentioned earlier. Indeed, President Obama declared we (the US) respect the right of the Iranian people to access peaceful nuclear energy. And if it is not peaceful, then what?
Domestically Texas Senator Ted Cruz is performing what will surely be an almost Alamo performance on C Span, displaying his dislike of Obamacare. This marks the official start of the Obamacare mishaps. One writer posed an analogy that I have only seen that one time. Jonathan Gurwitz in the San Antonio paper compared the Affordable Care Act to Prohibition. He noted that it was obvious Prohibition did not keep eople from drinking. Yet it took years to rescind it. Think about that.
Of course we could be wrong. But the world looks a lot more like 1976-1978 than 1982.