Episode: Why the Next Four Months Favor the Bulls


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Why the Next Four Months Favor the Bulls

In a week where the Nasdaq, Russell, and S&P 500 all made all-time highs – and Amazon roared past the $2,000/share mark to become history’s second trillion-dollar company – John, Scott, and Greg break down the events that made last month the best August for markets since 2014.

Scott pegs trade negotiations as having been the single biggest event last week, with a deal with Mexico fueling a round of Wall Street optimism for a subsequent breakthrough with Canada – that is before the second-biggest event of the week, President Trump’s comments to Bloomberg, put further hopes on hold, at least for now. 

John predicts that midterm political realties will be a driving force behind a deal with Canada, since they constitute 36% of our trade. “So that’s gonna get fixed… there are enough people whose jobs are involved with Canadian trade.” 

China, on the other hand, doesn’t carry as much midterm clout. “I don’t think anything’s going to happen with regards to fixing that problem… you’re probably looking at $200 billion in tariffs on Thursday.”

Greg shares what he wrote about Amazon stock in his weekly market outlook – “It’s a trend that’s hard to fight – you can’t fight it – and it’s in overbought territory, but you can’t fight that price momentum. Every day it’s becoming a more intricate part of people’s life. Health care, entertainment… what else is he going to take over?”

Scott parses a call with Morgan Stanley talking up Amazon’s high-margin streams that raised targets for Amazon stock to $2,500. and how a higher weighting in the index could drive the stock higher still. 

Greg talks about what he's seeing in the markets going into the end of the year, and gives a great case for a market rally: "The next four months favor the bulls."

Greg then discusses benchmark indexes, and why he thinks people focus to much on benchmark comparisons. He’s waiting for semiconductors to break out – they’ve been the foremost leaders of this bull market, and senses that will continue. 

John warns how markets are highly concentrated in a few stocks and the resulting shift to passive investing and "chasing the herd."

Looking ahead, the big event of the week is the next round of China tariffs. Greg gives a scenario that could have global stocks, especially Chinese ones, turning higher. 



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