What’s the best metaphor to describe the stock market, that has sent the S&P 500 up 16% from its October lows, and up 6% this year?
Morgan Stanley strategist Mike Wilson has turned to the Jon Krakauer best-seller “Into Thin Air,” which chronicles the death of 12 mountaineers trying to scale Mount Everest. The book delves into the death zone, which starts 3,000 feet from the mountain’s summit, an altitude where oxygen pressure isn’t sufficient to sustain life for an extended period.
By December, however, “the air started to thin” with P-to-Es down to 18, and the equity risk premium down to 225 basis points. “In the last few weeks of the year, we lost many climbers who pushed further ahead in the death zone,” he said. The “no landing” scenario is one most closely associated with Torsten Slok, the chief economist at Apollo Global Management. It should be noted that Slok says a no-landing scenario — where the economy does not slow down — is not good for markets, because it will require more aggressive Fed rate-hike activity.
A major factor Mike forgets: more than 60% of the market is held by ~ ten thousand investment company funds managed by ~ ten thousand managers who automatically buy with very large sums of monthly cash. Now, is Mike addressing them, or the elite sector of self-directed accounts?
It’s the day traders shorting, let’s squeeze them
The into thin air metaphor was very cool
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