Episode: Why "Late Cycle Sectors" Are Piling Into This Bull Market

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Why "Late Cycle Sectors" Are Piling Into This Bull Market

John and Scott recap the week that was – a solid week for the S&P 500 and an even better week for the tech-heavy Nasdaq, with small-caps outpacing both – and John notes how “late cycle” sectors – the areas that usually tag along towards the end of bull markets – are up as much as 10% over the last month. The hosts discuss last week's jobs report, why an official uptick in unemployment is, counterintuitively, a good thing, and why it sent the market rallying for a second straight day in the face of trade tensions.

Scott adds that manufacturing growth isn't slowing yet, according to his sources. Scott and Greg discuss the current U.S. growth picture – is over 4% really happening? – and what that could mean for trade negotiations in China and Europe. Earnings season is about to heat up again, with banks getting started on Friday the 13th. Scott and John discuss what to look for, and Scott reveals why analysts’ estimates of 20% earnings growth for Q2 could be, if history is any guide, conservative. John asks about buybacks, and wonders why not even big banks’ $110 billion combined buybacks seem to be moving the needle. Scott talks about why companies buy back shares, even at or near all-time highs. But it’s as risky as it sounds.

“Bank earnings better be pretty damn good.” John asks Scott and Greg about cryptos and if they will help or hurt payment processors like Visa and Mastercard and their $97 billion haul last year in credit card fees. Greg makes sense of the declaration from researchers in the Imperial College of London that’s now reverberating in markets:

“Cryptocurrencies are ready for mass adoption.” John talks about Buffett's love for selling puts, and just how profitable the trade has been for him over the years. Scott asks Greg about what he sees in the time cycle analysis he does for Ten Stock Trader. Greg points out a date that he sees being a big inflection point, and urges patience when trading this month. “Either an explosion of this bull market… or something much more sinister at hand.” Greg also notes some key divergence that he sees across the markets today. “Once that does play out, there are very low risk-reward trades to be made.” John asks Greg and Scott about the yield curve and rates, and Scott points out what could be a peak in the rate cycle.

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