Tower Private Advisors
- a quickie
- multi-year low Fear Index readings
- a crackpot in North Korea
Capital Markets Recap
I guess it shouldn’t be surprising. The U.S. equity markets are pushing all-time highs; it’s natural that no one is worried about anything. In turn, folks aren’t seeking the protection of option strategies, and that’s leaving the Implied Volatility (i.e. The Fear Index) at multi-year lows. There are two endangered species on Wall Street, the stock bear and the bond bull.
Something that market technicians like to see is confirmation across markets. So, for example, if the Dow Jones Industrial Average is making new highs, then one would expect a robust market advance to push other U.S. markets to similar levels. We’re seeing that. Check the box. Globally, however, there is a lack of confirmation, with many, many markets well below all-time highs, so leave that box unchecked; no global market confirmation. It is interesting to note, however, that with the whacky, early 1900s construction of the Dow Jones Industrial Average (i.e. no computers, let’s just build the index based on stock prices; higher price = greater weight in index), a slightly different mix of stocks would have had the index hitting new highs months ago.
Now, I don’t mean to rain on your parade, but I’ve heard many institutional investors characterized as fully invested with fingers hovering near the Sell button. Spook this market just a little and a correction gets underway. Want something to worry about?
But first, a little about me–just a little…I’ve been called a vessel of others’ thoughts (I prefer to think I stand on others’ shoulders.) That’s all about me, but I am about to embody that notion…
There are economists who would find ways to argue with the following, but I’m about to tell you about the closest thing to a free lunch, followed by a free dessert.
If you’re interested in a market commentary that isn’t run of the mill, with the occasional bit of strategy thrown in, go to Cumberland Advisors and sign up for the complimentary market commentary. Next, if you’re a geopolitical junkie, or otherwise wish to be kept abreast of what’s going on in the world–stuff that’s left unreported by the usual outlets–go to Kforce Government Solutions and sign up for its free daily/nightly NightWatch (I was alerted to the latter by the former…free lunch and dessert). There you would have been alerted–many days ago–to the goings on in North Korea that produced this headline, today.
That country’s crackpot leader, who many had hoped would not be a chip off the old block, is doing dearly-departed-father proud, ending an armistice, all but declaring war on the U.S. in the process. I have reproduced David Kotok’s–of Cumberland Advisors–missive of earlier this week, verbatim, below. The combination, however, of investors lulled into a false sense of security by the pretty people (are those your real lips?) on the cable television finance shows trumpeting new highs and nothing to worry about , which is evidenced by the low Fear Index reading above, and a crackpot in North Korea could produce a serious teeth-kicking for the markets.
But I’ve got to run. I have a date with the beautiful and charming Mimi Stettner, who is my eight year-old daughter.
I don’t how legible this will be. If you have trouble, click here to go to the original on the Cumberland site.