The bottom line is that the casino class has been bailed out too many times, so now they assume that all bad news is good news.
Even imploding profit forecasts. Now set to decline in the first quarter (ending March).
What to do? BTFD:
"Companies will need to stop reversing earnings forecasts lower before markets can set new highs, unless investors go on a 1999-style buying frenzy."
What we need to assume is even more dunces in the casino:
"Given the market’s bullish reaction to the Fed’s about-face last week, it is apparent that investors “realize the importance of the ‘Powell put’”
In other words, the Fed's recent policy reversal has caused gamblers to ignore all risks when ironically the Fed reversed because risks have massively increased:
"An escalating trade war, a hard landing in China, and Brexit could prompt a global recession"
Sadly, for the Y2K melt-up delusion, the leading sectors are all end-of-cycle deflation plays, specifically Utilities, and Real Estate Investment Trusts.
Here we see REITs as a ratio of the S&P 500:
Speaking of all those "priced in" risks, they are all coming to a head at the same time:
"Trump responded “No” and shook his head Thursday when reporters at the White House asked him if he would meet with Xi this month. Then he added, “Unlikely.”
Of course, this is only about the thirtieth time that the casino has been gamed by this on again off again trade war scam, but who's counting. What we now know is that there will likely never be a trade deal. Why? Again, due to massive arrogance combined with massive exploitation. What the MAGA team wants is for China to continue to be America's sweatshop but to promise not to "steal" U.S. technology. It's the patented, I want my sweatshop and S&P profits too, strategy.
Sadly for that arrogant delusion, China expects more out of this Faustian Bargain than to convey cheap junk to Walmart zombies, in perpetuity. The Chinese populace has paid an unholy price in service to to S&P 500 profit. Their end-game goal is industrial dominance. Which puts two bald men fighting for global economic hegemony, with the U.S. stock market at the intersection of no way out.
But don't take my word for it, because lifelong free-trader turned trade warrior Larry Kudlow essentially confirmed the same today:
"Kudlow said U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin’s next trip to Beijing still may not result in some of the agreement even being drafted."
China's markets re-open on Monday. We'll see how they take all of this great news.
The other "bullish" news was from Europe, where UK growth has been slashed to decade lows. But like the ECB, and the Fed, they plan to keep tightening:
"...in the U.K., the Bank of England cut its growth and inflation forecasts. The central bank projected the weakest economic outlook for the U.K. economy since 2009. This is on the back of Brexit uncertainty as well as a slowdown in the global economy. Nonetheless, the bank stated that a gradual and limited rate hiking path lies ahead."
What about the "safe havens?"
Trump took care of those on Tuesday:
CNBC: Drug Stocks Are The Big Losers From Trump's State Of The Union Speech
"If the government passes legislation that makes drug companies lower their prices, shares of Merck and Pfizer, as well as related companies like CVS Health and UnitedHealth, could be under pressure, strategists warned."
Again, competing priorities for how best to restore greatness...
"What we need is bulk Viagra"