Is The 2014 Theme Intact ?
Just a few weeks ago market forecasters were looking at an economy based on a Growth Story Theme.
This theme has as its basis: that the FED will not abandon its Stock Market / Asset Price Support Policy. Contrary to some media speculation a continuing $ 10 billion taper is part of that theme. Importantly the small taper size makes it not really meaningful. The unstated FED operating factor is that the FED has reached a level of debt purchase that could not be sustained due to physical limitations.
With that overall market theme the media analysts are universal in advocating buying the sell offs in stocks, only question, should they buy a 4 % or rather a 7 % selloff.
Our macro view remains, consumers are the big factor, declining real incomes continue, the deflation threat is still out there, and the 2014 elections are going to foretell 2016 upheavals. Our sneak 2016 view, Hillary will not carry the day, maybe the nomination but not the election, she is out of touch. And, that doesn’t mean a mainline Republican has a chance.