‘The’ Bear Market – was not launched in the last two days; a trap-door doesn’t lie-in-wait for investors; and there also isn’t a bullish longer-term prospect, yet. 

We have repeatedly argued that history will record market internals, and a likely Recession as well (or a slip-back within the ‘Controlled Depression’ as I’m prone to refer to everything since the projected 2007-’08 ‘Epic Debacle reversal of years of bullishness from the 2002 lows (we had called for a crash in 2000; a preceding point of bearishness after a quarter-century of optimism overall). 

In that respect yes, there is a ‘vacuum’ technically underlying this market, but it should not be a ‘trap-door’ except for the Johnny-come-lately’s and managers who tried to ‘force’ the market to move higher repeatedly (and rack-up losses in the process); or those who must be fully invested all the time, so thus rotated in chaotic fashion for months, particularly as the Dollar pressed margins for many US companies who derive significant revenue proportions from sales abroad.

This weekend’s (briefer text some days during the holidays) remarks are clearly centered on recognizing this set-up in the wake of the FOMC rate hike as we’d suspected; ideally rallying on the hike (after brief but wild trench-warfare) and in response to foreign currencies slipping, with the Dollar up (before pulling back a bit, but still focused on sightly higher levels in time) and Oil lower, giving hints more of deflation than of inflation, much less recovery with traction, the Fed ‘pretends’ is ongoing. The Fed says they did this because they’re early. Market action before and after says they were late, or perhaps incredibly early. But we knew that too; expecting they were in a corner (no good outcome regardless); a corner that really required they lift rates for macro, not domestic, reasons. 

It’s of course important to note that the Fed move did ‘not’ change economic or global attitudes. Competitive devaluations persist; the sluggish consumer plans remain; the terror threat is actually amplified (sadly, and we know why DC has these vague comments about ‘nothing specific’, because there are efforts by a slew of barbarians to disrupt the holidays; some known that you’ll never hear of and others hopefully disrupted… examples are suggested by remarks this week by the heads of Homeland Security, the FBI and even the Pentagon… contrary on the surface to the President saying nothing specific going on). I hope he is right; just pointing it out. Also ‘The New York Times’ omitted a couple sentences of an online article about the President saying he wasn’t ware of the anxiety of Americans after Paris and San Bernardino because he hadn’t watched enough TV. If I didn’t see that in the most liberal paper online, I’d not believe it. (By the time it reached print editions, it was deleted and supportive remarks inserted.)