An incredible sigh of relief – for money managers, has them enthused that all woes of significance are over; and Goldilocks has returned. Even the Fed’s Williams reinforced that view, with his remarks.

Back to ‘Goldilocks’. We won’t complain if it’s really the case, as I have called for volatility phases in this market, not a catastrophic collapse as some persists contending in a few cases since Trump won. That’s the opposite of our view; perhaps a reflection of how many had to ‘chase stocks’ at higher levels thereafter. However I doubt this is really healthy.
 

Earlier Friday I happened to allude to one of very few money managers that were in full agreement with our view of what would happen if we got a Trump victory. It might matter because his concerns expressed to clients today, sort of echoes my own. Or maybe with this strong rebound, I’m sort of looking for analytical support for my suspicions about the sustainability of market rallies this Spring and perhaps parts of the Summer as well.

However, again, I am not looking for disaster barring exogenous events. I even suspect there could be favorable exogenous developments, such as avoidance of trade wars, and progress towards Korean Peninsula peace.
 

The Jobs data just shows that the Fed should continue removing what for sure was excessive accommodations; and work towards a neutral stance; so one should be careful about presuming sustainability of stock market advances versus the credit market conditions. The presumptions that we can have these low rates persevere during the next few months are just a bit too Pollyannish.

We’re having a good economic year; with a very flat yield curve; and that yield curve sort of suggests out-year yield economic growth still remains a prospect, but perhaps more sluggish with respect to expectations. So yes it seems we’re set for higher wages, somewhat higher prices, and strains in the jobs market (already there for truly skilled workers in higher tech); a need for more productivity (that’s where the Productivity spending goes) and all of that (while terrific) should dampen the equity enthusiasm mostly as relates to conservative returns, except where a few bright spots prevail (and I define bright spots not on the new high list; but under-appreciated).