Earlier we wrote about how market bears are going extinct. Multiple surveys show the number of people who think the market is going to go down are rapidly dwindling.
So why is everyone so bullish?
A simple theme is emerging: The existing environment of mediocre growth (not too hot, not too cold, no big pressure on the Fed to tighten) is likely to continue.
This was the commentary from David Zervos after Friday’s Jobs Report, who said the weak Non-Farm Payrolls report was the perfect report for the bulls.
And here’s Dan Greenhaus of BTIG (@danBTIG):
They say bull markets are born on pessimism, grow on scepticism, mature on optimism and die on euphoria (see our related note Where are we in the Business Cycle and Does it Matter?). After Friday’s payroll figure, does anyone know anyone else feeling “euphoric?” The WSJ’s headline regarding the jobs report reads Slowdown in Hiring Stirs U.S. Growth Worries while the NY Times wondered about “Malaise.”
Basically that’s it. The economy isn’t growing, but we’re not at the euphoria stage yet.
A similar point was made my Morgan Stanley, that we’re just not seeing anything that could resemble overheating yet:
A world “out of sync” will extend the cycle. Growth and monetary policy dynamics remain highly un-synchronised in the developed and emerging world. This lowers the likelihood of overheating and is one reason we think the current global expansion could end up being one of the longest on record.
So unless we get a rapid acceleration that causes a dramatic pulling forward of Fed tightening, or something that causes a real deterioration in the economy, people will have a hard time articulating a bear case.