FOMO, Melt-Ups and Rising Tides
On Monday, a reader, who’s tired of hearing Americans gripe about taxes, wrote: “If you want Cadillac services… be prepared to pay for a Cadillac.”
A reader responds: “I would add: If you pay a government for Cadillac services … be prepared for a Trabant.”
Spark plug on wheels
A worthy analogy?
The East German-made Trabant was so stripped down, the car had no turn signals, no fuel gauge, no rear seat belts and no external fuel door. Not to mention, the model didn’t much change in the three decades it was manufactured.
And talk about a bureaucratic nightmare. People in East Germany were waitlisted a decade to purchase a Trabant. It was so upside down that a used car might sell for double the asking price of a new. More timely that way.
Big government at its finest?
Your Rundown for Wednesday, April 17, 2019:
FOMO, Melt-Ups and Rising Tides
Bloomberg reports: “The rising tide is no longer lifting all boats…”
The rising tide in this case being the S&P 500 Index that’s testing all-time highs seen in Feb. and Sept. 2018.
Looking at April alone, the index has gained 1.4% while other S&P sectors have dropped markedly with health care seeing the steepest decline.
Not shocking considering unsatisfactory earnings from two of the sector’s mainstays: Johnson & Johnson (JNJ) and United Health Group (UNH). And talk of “medicare-for-all” from presidential hopefuls isn’t exactly putting a floor under the sector. Quite the opposite
So as investors pivot out of healthcare — even as the S&P 500 continues a slow but steady climb — it’s good to ask if we’re in a melt-up situation driven more by investors’ fear of missing out than any real economic strength.
Something the relative strength index implies; it’s been hanging out near 70 the entire month, hinting the market’s near overbought levels.
Do you think we’re in for a market correction? Is the bull market on its last legs?
Market Rundown for Wed. April 17, 2019
S&P 500 futures are down 4 points to 2,903.
Oil is up 3 cents a barrel to $64.08.
Gold is down 90 cents to $1,276.30 per ounce.
Bitcoin is up 80 cents to $5,210.11.
Have a good day. We’ll talk tomorrow.
For the Rundown,
Aaron Gentzler
