Unless we see significant signs of economic weakness in the months to come, the Fed should start to raise rates in June. For KO to be an attractive trendy boutique once again, this author will need to see a more compelling valuation, such as a stock price of $25 to $30 a share. Market expectations that lift-off will occur around mid-2015 seem reasonable to me. First, when lift-off occurs, the pace of monetary policy normalization will depend, in part, on how financial market conditions react to the initial and subsequent tightening moves. Some day or month, I will have to return some of my profits to Mr Market. If the reaction is relatively large-think of the response of financial market conditions during the so-called “taper tantrum” during the spring and summer of 2013-then this would likely prompt a slower and more cautious approach. In contrast, if the reaction were relatively small or even in the wrong direction, with financial market conditions easing-think of the response of long-term bond yields and the equity market as the asset purchase program was gradually phased out over the past year-then this would imply a more aggressive approach. Gold has had a huge run over the past month and given that bank stocks were very strong over the last few days, you are seeing some money rotating out of Gold.
Below is a list of stocks that are worth watching for July 14, 2010. Also, check out some of the biggest stock gainers of the Day. This pattern is suggestive of continued small cap underperformance for the next couple of weeks, followed by a typical seasonal small stock rally into January. Charlie Bilello at Pension Partners created a chart that described this pattern well and it seems to be a reasonable roadmap to use. As the chart shows, we got a signal recently where both the asset and flow ratio reached a crowded long extreme. The chart below shows the relative performance of a number of market leaders relative to the SPX. A good measure is the relative performance of the Australian stock market (EWA) to MSCI All-Country World Index (ACWI) as most of Australia’s raw material exports go to China. Major stock indexes erased much of their early losses, leaving the market mixed at the end of trading Monday.