In some ways this article is futile. There is no way the coterie of permabears, who have been screaming "the bear market crash has resumed" during at least eleven corrections in this four (soon to be five) year bull market, is going to be satisfied with data proving the economy is growing and the stock market is headed higher.
That doesn't mean the rest of you Seeking Alpha readers have to fall for this gibberish however.
The latest argument bears use claiming "theeconomyisslowingdownso weneedtospendmoregovernmentmoneyandcontinuequantitativeeasing," ad nauseum, is a seductive one. In recent sessions long-term government bonds have rallied, which is usually evidence the economy is slowing and investors fear taking risk. Bears claim the shutdown and continued sequester will drag growth, and the market, lower. Thus, we better hide in US government bonds.
At first glance not a bad idea. Since the compromise was reached, iShares 20+ Year Treasury Bond ETF, (TLT) has rallied smartly.
After a few false starts from congressional breakthroughs that didn't pan out, bonds caught a solid bid on October 16th. So are the permabears right?
No. Utilities are also high yielding investments, and the companies are as sensitive to a slowing economy as any sector out there. So why has the SPDRs Select Utilities ETF (XLU) done even better than bonds over the same span? Simple. The improved prospects of dividend growth: growth, which comes from an expanding economy.
And of course permabears must think the folks buying consumer discretionary shares, represented by the eponymous SPDR ETF, have lost their minds:
I admit they may have lost their minds. But they sure haven't lost any money lately, have they?
Keep an eye on the relative performance of these three ETFs, since the period we highlight above is a very short one. But as long as the song remains the same, the bullish music will continue.