I hate to be a Debbie Downer here, but the writing on the wall couldn?t be more clear.
The Fed minutes, released at 2:00 PM this afternoon, greatly increased the probability of a Fed rate rise in June. That set the cat among the pigeons.
Higher interest rates are terrible news for stocks, except the long-suffering financials.
It focused a great, bright spotlight on the many reasons shares should go down, including:
1) Talk of an interest rate hike from my former Berkeley economics professor, Federal Reserve Chairman Janet Yellen, is ramping up. If they pull the trigger, you can chop 10% off of the stock market in a week. Yes, central banks DO make mistakes.
2) Corporate earnings are falling. Look no further than the disaster that are retail stocks (M), (TGT), (JCP).
3) At 19 times 2016 earnings, stocks are at decade highs in terms of valuations. Fear of heights anyone. Don the oxygen masks!
4) The calendar is hugely negative. No one ever makes fast money investing in May. Buy stocks today, and you may not break even until next year. Try explaining that one to your boss, your investors, and your next executive outplacement professional.
5) A monster rally in the bond market is predicting an imminent ?RISK OFF? move in global risk assets. Try whistling past the graveyard.
6) So is the near straight line rally in gold stocks (ABX), (GDX), (GLD).
7) Only a rare coincidence of global supply disruptions, like in Canada, Iraq, Libya, Nigeria, and Venezuela, has gotten oil up this high. When production comes back on stream, watch Texas tea roll over to test new lows, taking stocks with it.
8) If England leaves the European Community after its June 23 ?Brexit? referendum, you can kiss the global economy goodbye, including ours. Last time I checked, the polls were 43% to 42% in favor of staying, far too close for comfort. Book that European vacation now before the continent implodes.
9) Turn on the TV or open your Twitter account and you get a hand grenade thrown at you from a presidential candidate. Stocks would rather hide out in a bomb proof bunker.
10) According to my vintage Rolex wristwatch, this bull market is seven years, two months, nine days, four hours, three minutes and 47 seconds old. Sounds pretty geriatric to me.
