"Whatever you do, do not report that the Nasdaq and S&P 500 are making all-time highs (again)," writes Hedgeye CEO Keith McCullough this morning. Rather than staring at partisan headlines, consider the facts. Here it goes...
1. The Profits Accelerating Story of 2017
So far, 479 S&P companies have reported aggregate year-over-year sales and profits growth of 8% and 14.9% respectively. If the current trend perisists this would be the highest year-over-year earnings growth rate in six years.
2. all-time highs for the S&P 500
As the stock market continues to hit all-time highs, Technology (XLK) and Consumer Discretionary (XLY) stocks are leading the pack. That's precisely what you'd expect to see when the U.S. economy is heating up (i.e. the U.S. consumer is back).
3. Shorts Squeezed
"US market short-interest as a percentage of the float has trended higher all-year – it bottomed to close out 2016," writes Hedgeye CEO Keith McCullough. "With the S&P 500’s implied volatility DISCOUNT (vs. 30 day realized vol) diving into the down-double-digit (-10%) zone, this looks like a pure and unadulterated capitulation of the bears to me."
4. Here's one more for the road...
Since Election Day, the partisan mainstream media has blamed every selloff (no matter how modest, or made up!) on President Trump. And yet, every step of the way, the markets have defied politically-motivated narratives. The Nasdaq is up almost 19% year-to-date.
The sad reality is that this had nothing to do with Trump and had everything to do with domestic economic data improving. (From the lows last year, U.S. GDP has gone from 1.3% year-over-year growth in the second quarter of 2016 to 1.9% in the first quarter.
