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I think the "bear capitulation" in this case are the bond bears, so the fierce volatility yesterday and the big rally in prices was partly due to the bond bears giving up and covering short positions. You also posted an article from Barron's Asia that suggested there's a flight to quality from emerging markets to US bonds and that's probably part of it too. It would be interesting to hear what @Junkster has to say because he seems to have his finger on the pulse of the bond markets. Did the spike yesterday at the beginning of European trading worry him that a top might be in? Did he tighten his stops?
Well I was thinking more that as the stock market has fallen a bit and bond yields are now unbelievably low, that at some point money has to start rotating out of bonds and into stocks, pushing rates and stocks higher rather than any specific action from the Fed, which I don't see coming anytime soon even if I think it should be sooner than the Fed will actually act. I think we need a spark and nothing today seems to be causing that, but the more stocks go down and the lower bond rates go has to reduce the attraction of US bonds as a safe haven (but I've been saying that for a while now and I've been wrong so far).
Maybe its Q3 earnings if the outlook is better than expected, maybe its the ECB and/or BOJ getting more aggressive with monetary policy, maybe its a resumption of the good economic numbers that seemed to have disappeared the last few days, maybe its a capitulation of those shorting bonds that starts a rotation out of bonds and back into stocks, maybe its getting past the elections in a bit less than 3 weeks, maybe, just maybe, its an easing of tensions in Russia/Ukraine as Putin realizes he has a very serious problem on his hands with his key source of revenue losing value quickly while his costs are going up and his economy is in trouble.
I'll take anything I can get as like others, including you I think VF, I've been buying stocks (and shorting long treasury bonds) on the way down/(up) and while I'll continue to try to take advantage as long as it continues I would be more than happy to look back in December and feel like it was a decent year and that I got some decent benefit out of the recent turmoil. Fingers crossed!
Comments
Maybe its Q3 earnings if the outlook is better than expected, maybe its the ECB and/or BOJ getting more aggressive with monetary policy, maybe its a resumption of the good economic numbers that seemed to have disappeared the last few days, maybe its a capitulation of those shorting bonds that starts a rotation out of bonds and back into stocks, maybe its getting past the elections in a bit less than 3 weeks, maybe, just maybe, its an easing of tensions in Russia/Ukraine as Putin realizes he has a very serious problem on his hands with his key source of revenue losing value quickly while his costs are going up and his economy is in trouble.
I'll take anything I can get