Yikes. History tells us that when we start seeing lots of stories about a shortage of stocks, a market top is near.
The team at JPMorgan says the net supply of global equities fell last year for the first time ever and is expected to only flatline in 2017. Meanwhile, global bond investors are soon to be sitting on piles of cash thanks to an avalanche of maturing debt.
Australia has called for the Trans-Pacific Partnership to go ahead without the U.S. following President Trump's withdrawal from the 12-nation trade agreement.
China's foreign ministry declined to say whether Beijing would consider any invitation to join the TPP, but a spokesperson instead cited rival trade pacts, saying that Regional Comprehensive Economic Partnership "should be concluded at an early date."
The IMF has raised its forecasts for the U.S. economy, reflecting an expected boost from the economic policies of President-elect Donald Trump.
The new outlook sees U.S. growth at 2.3% this year and 2.5% in 2018 (+0.1% and +0.4% from previous estimates), marking an improvement from lackluster American growth of around 1.6% in 2016.
Regarding its World Economic Outlook, the IMF kept its overall growth forecasts unchanged from October at 3.4% for 2017 and 3.6% for 2018, up from 3.1% growth in 2016, the weakest year since the financial crisis.
The world economy is expected to expand 2.7% this year, recovering from a post-crisis low in 2016, thanks to rising commodity prices and Donald Trump's stimulus plans, the World Bank said in its latest Global Economics Prospects report.
However, this growth could be hit by a significant slowdown in investment in emerging markets and political uncertainty in major economies, including the U.S.
"This new administration hates weak, unproductive, socialist people and policies, and it admires strong, can-do, profit makers," says Ray Dalio.
Our country, he says, is about to undergo a shift that may very well dwarf the Thatcher, Reagan, and Kohl socialist-to-capitalist revolutions of the late 70s and early 80s.
By just looking at the numbers from tax and spending policy changes, analysts will miss the larger impacts of ignited animal spirits and attraction of productive capital.
Dalio: "If this administration can spark a virtuous cycle in which people can make money, the move out of cash (that pays them virtually nothing) to risk-on investments could be huge" - a sentiment the stock market averages apparently figured out the night of the election.
Donald Trump gave investors a road map to the administration.
The President-elect tweeted that the two simple rules of his administration are to buy American and hire American.
If trade and tax policies are supported by DJT's new directive, there could be some broad implications for certain stocks.
Companies like Target (NYSE:TGT), Kroger (NYSE:KR), AT&T (NYSE:T), Ulta Salon (NASDAQ:ULTA) and Cedar Fair (NYSE:FUN) could be in a decent position, while things get trickier for the likes of Nike (NYSE:NKE), Procter & Gamble (NYSE:PG), Ford (NYSE:F), Toyota (NYSE:TM) and a host of other multinationals.
There's also big players like Anheuser-Busch InBev (NYSE:BUD) and Intel (NASDAQ:INTC) that stand somewhere in the middle.
Add your own "buy American, hire American" stock picks in the comment stream.
"The dam is breaking, you can feel it," Jeff Gundlach tells Reuters, referring to the recent string of modest S&P 500 declines. He sees another 5-10% downside for the index.
Meanwhile, DoubleLine's $61.6B Total Return Bond Fund (MUTF:DBLTX) (ETF cousin: TOTL) suffered its first month of net outflows since January 2014, with $33.2M pulled. The $7.7B Core Fixed Income Fund (MUTF:DBLFX) had net inflows of $166.5M in October, bringing YTD inflows to $2.1B.
Having been vocally bearish on bond prices for months, Gundlach isn't surprised at least some are heeding his warnings and pulling money out of fixed income offerings.
"The possibility of a severe fall in the stock market is now very high," says HSBC technician Murray Gunn, noting rising volatility since the end of the summer, and the broadness of the recent selloff.
Gunn is also worried about the rising Trader's Index - an indicator combining market breadth and the trading volume of advancing and declining stocks.
Ben Laidler, the bank's global equity strategist, says stocks are exposed to "a dangerous combination" of risk factors like high earnings expectations, economic policy uncertainty, and the upcoming election.
Historically, periods of sub-zero long-term real Treasury yields have corresponded to very low S&P 500 P/E ratios (under 12x), but this time is different, says Morgan Stanley's Adam Parker.
1) Current low bond yields aren't a viable alternative to stocks; 2) There is massive liquidity in the U.S. market; 3) The U.S. is the only major region with positive EPS growth as a base case; 4) Investors aren't positioned for major upside.
Parker and team lift their base case target on the S&P 500 to 2,300 from 2,200. The index currently sits at $2,180.
Schwab (NYSE:SCHW) didn't get into the ETF business until 2009, but with $7.69B of inflows YTD, the operation manages $50.4B in ETF assets, making it the fifth-largest U.S. ETF sponsor.
A big reason is fees, and Schwab's funds have among the lowest expenses in the industry - in some cases lower than competing funds at Vanguard (whether there's a profit in that is a different story).
The Schwab U.S. Large Cap ETF (NYSEARCA:SCHX) and Schwab U.S. Broad Market ETF (NYSEARCA:SCHB) are the company's two largest ETFs, and each have a barely visible 0.03% expense ratio. They've brought in $681.5M and $569.6M of inflows, respectively, this year, according to S&P Capital IQ, which rates both ETFs Overweight.
In fixed-income, the $3.18B Schwab Strategic Trust (NYSEARCA:SCHZ) is 2nd in inflows this year among Schwab funds, with $994.3M. It's 0.05% expense ratio is lower than comparable ETFs from iShares and Vanguard. S&P Capital IQ rates it Overweight as well.