Carried on the back of behemoths such as AAPL, AMZN, BIIB, GILD, & NFLX the markets continue to push new all time highs. Of the major indexes only the Nasdaq Composite is not currently trading at all time highs. However; Have no fear the finish-line is in sight. The momentum is in motion and the Bulls are mere days away from cracking the all-important psychological 5,000# before the engine that is Apple fueled by the gas in the tank of the modern day Biotech bubble ramps this beast into uncharted territory!
It is interesting to note that although the index is rapidly approaching nominal highs, in real inflation adjusted terms the index still has a ways to go.
This brings me to the point of why the Federal Reserve will not raise interest rates any time soon.
Well logically knowing that because energy prices are likely to remain suppressed and also knowing that 90% of the economic data coming in for February has missed indicating a rapidly deteriorating economic landscape we can logically conclude that the Fed won't be raising rates any time soon.
We can see from the charts that as energy 'stabilized' in a what is beginning to look like a textbook bull trap in a violent downtrend and investors have been soothed by the Fed that low rates are here to stay, the unquenchable thirst for yield is back on with a vengeance as the High-Yield (or Junk as it used to be known as) bond market has bounced with vigor. Energy stocks have also outperformed the commodity as billions of dollars of bottom callers money has flooded into the market .
Using the knowledge gathered from the inventory reports, and unstoppable trends in increasing oil production and dollar strength a logical person can conclude that oil has further to fall. Once oil gives up the previous $43.58 lows I expect the crowded junk bond trade to unwind and floodgates will open once again.
In conclusion just because the market is making marginal new highs in the indexes powered by limited participation, do not fool yourselves into thinking that everything is rosey. The fallout of the energy sector is very real and there is certain to be contagion...