Stocks rebound with Deutsche Bank as risky financials look cheap

Markets were mixed again on Friday.

The S&P 500 rose 0.8 percent but the STOXX Europe 600 was flat and the Nikkei 225 tumbled 1.5 percent.

Markets have been driven by concerns over Deutsche Bank in recent days and it was no different on Friday. The German bank's stock fell 9 percent early in European trading but recovered to end up 6.4 percent after a report suggested that it was near a deal with US officials to reach a settlement related to its dealings in mortgage securities.

“The odds of a large hole in bank balance sheets are pretty minimal at this point,” said David Lefkowitz, senior equity strategist at UBS Wealth Management Americas.

However, Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management, said that “the eurozone banking system is still an overriding question”.

David Lebovitz, global market strategist for JPMorgan Asset Management, told CNBC that there “is a lot of headline risk right now” in financials but added that “the one pocket of value that is left is financials”.

Markets mixed amid concern over Deutsche Bank

Markets were mixed on Thursday.

US stocks fell, with the S&P 500 declinig 0.9 percent, but the STOXX Europe 600 was flat after being up earlier in the session.

Oil rose, with West Texas Intermediate oil rising 1.7 percent.

Stocks were hit after Bloomberg News reported that about 10 hedge funds that do business with Deutsche Bank have moved to reduce their financial exposure.

“The Deutsche Bank situation is major,” said Timothy Ghriskey, chief investment officer at Solaris Asset Management.

Ed Al-Hussainy, senior global interest-rate analyst at Columbia Threadneedle Investments, said that Deutsche Bank’s solvency is not a critical risk yet, but “if it does start to happen, it happens pretty quickly”.

Stocks rise, oil jumps on prospect of production cut

Markets were mostly up on Wednesday.

US energy stocks jumped 4.3 percent to help drive a 0.5 percent rise in the S&P 500. The STOXX Europe 600 rose 0.7 percent.

US crude oil surged 5.3 percent after the Organization of the Petroleum Exporting Countries agreed on the need for a cut in production of crude oil.

“The cut is clearly bullish,” said Mike Wittner, head of oil-market research at Societe Generale SA.

Not everybody agrees.

Ian Taylor, the head of Vitol Group BV, said he “cannot see a good reason for a major increase in the price of oil” since the market remains “way oversupplied”.

While the jump in oil helped boost most stock markets, the Nikkei 225 fell 1.3 percent.

In bond markets, the yield on the US 10-year Treasury note rose to 1.567 percent from 1.556 percent on Tuesday.

Stocks rise, may see increased volatility

Stocks rose on Tuesday.

The MSCI world index rose 0.3 percent. The S&P 500 rose 0.6 percent while the STOXX Europe 600 Index added less than 0.1 percent.

The yield on the US 10-year Treasury note fell three basis points to 1.56 percent.

West Texas Intermediate oil fell 2.7 percent.

Oppenheimer technical analyst Ari Wald thinks that stocks are likely to continue to rise.

"We're not seeing the type of euphoria that you typically see at a major top in the market," Wald said on CNBC on Monday.

In contrast, Kathy Lien, a macro strategist and currency trader at BK Asset Management, told CNBC that there could be "a deeper correction in stocks", including a "Christmas collapse".

In any case, with the approach of October, volatility in the stock market could rise.

A CNBC report noted that October has been a volatile month for stocks during an election year. Since 1992, the CBOE Volatility Index has risen in each of the six presidential-year Octobers, spiking an average 21 percent.

Stocks fall, US corporate earnings expected to decline again in third quarter

Stock markets fell on Monday.

The S&P 500 fell 0.9 percent, the STOXX Europe plunged 1.6 percent and the Nikkei 225 tumbled 1.3 percent.

The declines were led by bank stocks amid concerns Deutsche Bank will need to raise capital following an anticipated legal settlement with the US Justice Department.

US stocks may continue to struggle after the latest poll by FactSet showed that companies in the S&P 500 are now expected to report an earnings decline again in the third quarter, the sixth consecutive quarter of declines.

The energy sector of the S&P 500 had the largest downward earnings revision for the third quarter, with earnings now expected to decline 66 percent, the largest among all sectors.

However, US crude jumped 3.3 percent on Monday, providing investors some hope that earnings may turn around soon.

“The market is anticipating we’re going to see a resumption of earnings growth, and I think that’s the right perspective,” said David Lefkowitz, senior equity strategist at UBS Wealth Management Americas.

US stock market "vulnerable" to higher rates

The US stock market is turning into a bubble, according to one economist.

In a research note last week, Lombard Street Research chief economist Charles Dumas wrote that money and credit growth in the US is encouraging another bubble in stock markets.

"The Fed has put market sentiment before the economy yet again. It is doing U.S. stocks no favors by provoking an unnecessary bubble with its certain subsequent burst," wrote Dumas.

"When the Fed gets real and makes the necessary increases, this market could prove much more vulnerable than is traditional in the early stages of a rate-hike cycle," he added.

Black Swan investor Mark Spitznagel said as much.

In an interview with CNBC the previous week, Spitznagel said that low rates and high valuation add up to a stock market that is "extraordinarily sensitive to changes in rates".

And to emphasise how high market valuation is, John Hussman wrote today that on normalized profit margins, the cyclically-adjusted market P/E would be at 36.

Markets fall, economic indices "rolling over"

Markets fell on Friday.

The S&P 500 fell 0.6 percent, the STOXX Europe 600 fell 0.7 percent and the Nikkei 225 fell 0.3 percent.

US crude oil fell 4 percent.

Some think the decline willl be short-lived.

Peter Tuchman, a floor broker at the New York Stock Exchange for Quattro M Securities, said the decline on Friday was just a breather after “a big move the last two days”.

“Businesses are still growing revenues, expanding margins, improving productivity and raising dividends, and at the end of the day that determines stock prices,” said Doug Foreman, chief investment officer of Kayne Anderson Rudnick Investment Management.

However, Dan Suzuki, Bank of America Merrill Lynch's senior US equity investment strategist, is cautious on stocks. He told CNBC on Friday that indices that track surprises in economic data “have been rolling over pretty hard since” last July.

Stocks rise as central banks maintain monetary support

Markets rose on Thursday.

The S&P 500 rose 0.76 percent, the STOXX Europe 600 jumped 1.6 percent and the Shanghai Composite Index gained 0.5 percent.

The yield on the US 10-year Treasury note fell to 1.630 percent from 1.668 percent on Wednesday.

US crude oil rose 2.2 percent.

“The market has come to the conclusion that everything is fine: central banks are still there, supporting equity markets and keeping yields low,” said Daniel Morris, an investment strategist at BNP Paribas Investment Partners.

“Crossing Wall Street” blog editor Eddy Elfenbein told CNBC that the Federal Reserve keeping rates low “really favors stocks right now”.

However, Chantico Global founder Gina Sanchez thinks that “the market's not really pricing for” a December hike and that investors “should really think about taking some profits”.

Fidelity Investment's director of global macro Jurrien Timmer said on CNBC that, in any case, investors should not expect a significant rally until earnings growth returns.

However, a return of earnings growth is exactly what Wells Capital Management's Jim Paulsen expects. He told CNBC that he expects earnings growth to return in the second half of this year. “I think the market can handle rate increases as long as earnings return,” he added.

Markets rise as BoJ and Fed maintain easy monetary policies

Markets rallied on Wednesday.

The S&P 500 rose 1.1 percent, the STOXX Europe 600 rose 0.4 percent and the Nikkei 225 jumped 1.9 percent.

US crude jumped 2.9 percent.

The US 10-year Treasury yield fell to 1.668 percent from 1.687 percent on Tuesday.

Markets rose after investors were encouraged by central bank decisions on Wednesday.

The Bank of Japan abandoned its base money target and instead adopted “yield curve control” under which it will buy long-term government bonds to keep 10-year bond yields at current levels around zero percent.

Later on Wednesday, the Federal Reserve left its policy interest rate unchanged.

The Federal Open Market Committee said in its statement after the decision: “The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives.”

While analysts still see a probable rate hike later this year, Bob Doll, senior portfolio manager at Nuveen Asset Management, said that “the stock market’s breathing a sigh of relief that we’ve got a few more months before we have to worry about an increase”.

Markets wait for central bank decisions but BoJ running out of options

Markets were little changed on Tuesday.

The S&P 500 was flat, the STOXX Europe 600 fell 0.1 percent and the Nikkei 225 fell 0.2 percent.

“No one is prepared to take on too much risk ahead of the Bank of Japan and the Fed Open Market Committee meetings,” said Chris Weston, chief market analyst in Melbourne at IG Ltd.

The BoJ's task looks particularly difficult after a report today showed that Japan's exports fell 9.6 percent in August, an 11th consecutive month of decline.

Indeed, Bruce Einhorn at Bloomberg suggested that the BoJ may be running out of options.

“Not even sub-zero interest rates have helped weaken the yen,” he wrote, noting that the yen is up 18 percent against the dollar since the start of the year despite negative interest rates.

Einhorn quoted Tom Murphy, managing partner of Family Office Research and Management in Sydney, as saying that Kuroda's quantitative easing “is losing its firepower”. Marcel Thieliant, Japan economist with Capital Economics in Singapore, said: “They are near the limits of what they can do.”

HSBC economists led by Frederic Neumann wrote: “Short of more radical options like helicopter money and foreign bond purchases, which both seem unlikely for now due to legal and political reasons, officials have few options left to ease policy meaningfully.”

A report last year by Jacob M Schlesinger had already warned as much. “Key policy makers argued Japan’s demography determined its economic destiny, that a contracting population inevitably dictated the country’s deflationary decline,” he wrote.

One of those policy makers was former BoJ governor Masaaki Shirakawa. In May 2012, Shirakawa delivered a speech where he cited global evidence that “the population growth rate and inflation correlate positively”, in “sharp contrast with the recently waning correlation between money growth and inflation.”

Chinese stocks rise but surge in credit and house prices reminds of Japanese bubble

Markets were mixed on Monday.

The S&P 500 was little changed but the STOXX Europe 600 rose 1.0 percent and the Shanghai Composite Index rose 0.8 percent.

China's stock market rose despite a report from the Bank for International Settlements that showed that China's credit-to-GDP gap hit 30.1 in the first quarter of 2016, up from 25.4 a year ago and way above the 10 threshold considered to be a sign of potential danger.

Among other things, the surge in credit in China has fuelled what many think is a housing bubble.

“The more immediate risk of a sudden and steep downturn in the economy comes from the threatened bursting of the property market bubble,” Pauline Loong, managing director at research firm Asia-analytica in Hong Kong, wrote in a report last week.

Indeed, China needs to beware of the lesson from Japan's bubble in the 1980s, dubbed the greatest bubble of all time by Ben Carlson.

Carlson wrote that from 1956 to 1986, land prices increased 5000 percent. In the 1980s, share prices increased 3x faster than corporate profits for Japanese corporations.

However, over the next decade, the Japanese stock market lost roughly 80 percent of its value and the economy has been struggling ever since.

US stocks could fall but bull run likely intact

Stock markets were mixed last week.

The S&P 500 rose 0.5 percent but the STOXX Europe 600 fell 2.2 percent and the MSCI All-Country Asia Pacific Index fell 2.3 percent.

While the S&P 500 rose marginally last week, Richard Suttmeier thinks that US stocks are likely to fall in the next few days.

However, Charles Schwab's chief investment strategist Liz Ann Sonders thinks the bull run is still intact.

"Just digesting the fact that central banks are not omnipotent and that we may have to move to other sources of opportunity for both the market and the economy I think is something the market has to digest, but I don't think it kills the bull market," she told CNBC on Friday.

Markets fall, former Fed official argues for rate cut

Markets mostly fell on Friday.

The S&P 500 fell 0.4 percent and the STOXX Europe 600 fell 0.7 percent. However, the MSCI Asia Pacific Index rose 0.6 percent.

The yield on the US 10-year Treasury note was little changed but US crude fell 2 percent.

“When the Fed starts pulling liquidity back, that increases volatility which will be heightened in the next six to nine months,” said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Company.

Former president of the Federal Reserve Bank of Minneapolis Narayana Kocherlakota thinks that the Federal Reserve should instead add stimulus by cutting interest rates a quarter percentage point at its meeting next week.

In an article for Bloomberg, Kocherlakota pointed out that inflation remains below the Fed's 2-percent target, with markets apparently losing confidence that the Fed will ever reach its target. The Fed is also falling short of its goal of "maximum" employment.

Markets higher but "will be lower"

Markets mostly rose on Thursday.

The S&P 500 rose 1.0 percent and the STOXX Europe 600 rose 0.6 percent.

However, the Nikkei 225 fell 1.3 percent.

Oil prices rose, with US crude rising 0.8 percent.

The yield on the US 10-year Treasury note rose to 1.703 percent from 1.689 percent on Wednesday.

While stocks were mostly positive on Thursday, some analysts see a risk of renewed declines ahead.

"I think we're at a point in time where the path of least resistance in this market is certainly lower and will be lower," Wunderlich Securities' chief market strategist, Art Hogan, told CNBC.

Markets fall, stocks at risk of correction

Markets mostly fell on Wednesday.

The S&P 500 and the STOXX Europe 600 fell 0.1 percent while the Shanghai Composite fell 0.7 percent.

West Texas Intermediate crude fell 2.9 percent despite a report on Wednesday showing a surprise drop in US inventories.

However, government bonds mostly rose, with 10-year yields falling three basis points in the US and five basis points in Germany.

Japan's 30-year yield rose six basis points though amid speculation that the Bank of Japan will concentrate its bond-buying on short-term securities.

While the fall in stock markets on Wednesday were mild, some see more declines ahead.

UBS technical analysts Michael Riesner and Marc Müller wrote on Tuesday that there is a risk of an 8 to 10 percent correction into late October/early November.

Barbara Kollmeyer at MarketWatch wrote that “we’re working toward a pullback for the S&P 500”.

Markets fall as stocks and bonds look overvalued, oil glut to persist

Markets fell on Tuesday.

The S&P 500 fell 1.5 percent while the STOXX Europe 600 fell 1 percent.

US 10-year Treasury yields rose six basis points to 1.73 percent while 10-year German bund yields rose three basis points to 0.07 percent.

Stocks and bonds are vulnerable because fund managers think both are overvalued, based on a survey by Bank of America Merrill Lynch.

Oil also declined on Tuesday. West Texas Intermediate crude fell 3 percent after the International Energy Agency said that world stockpiles of oil will continue to accumulate through 2017, a fourth consecutive year of oversupply.

Stocks rebound with Fed divided on rates

Markets rebounded on Monday.

The S&P 500 rose 1.5 percent after Federal Reserve Governor Lael Brainard recommended “prudence in the removal of policy accommodation” in a speech in Chicago.

The STOXX Europe 600 fell 1 percent, cutting an earlier loss of 2 percent.

Earlier, the MSCI Asia Pacific Index fell 1.9 percent.

After the speech by Brainard, the Wall Street Journal concluded that the Fed lacks a strong consensus for action at the coming meeting and is likely to wait until late in the year before raising interest rates.

However, it looks like bankers have had enough of low rates.

“Let’s just raise rates,” JPMorgan Chase Chief Executive Officer Jamie Dimon said on Monday at a discussion at the Economic Club of Washington DC. “You don’t want to be behind the eight ball on this one, and I think it’s time to raise rates.”

Cooling US economy keeps lid on Fed rate hike expectations

Markets fell sharply on Friday on concerns that the Federal Reserve may be about to raise interest rates.

However, Jeffry Bartash at MarketWatch reminds us that economic growth in the United States has not been great.

“A slew of evidence suggests that key segments of the economy such as energy and manufacturing are still struggling and that even some of the strongest sectors of growth have taken a step back,” Bartash wrote over the weekend.

“There are already growing signs the U.S. economy may be cooling down in August into September,” Scott Anderson, chief economist of Bank of the West, was quoted as saying.

“Middling economic growth and low inflation don’t seem like a sign for the Federal Reserve to raise interest rates. And most investors aren’t expecting one when the central bank meets in mid-September,” Bartash concluded.

Markets fall as interest rates seen rising

Markets fell sharply on Friday.

The MSCI All-Country World Index fell 2.1 percent. The S&P 500 plunged 2.5 percent while the STOXX Europe 600 fell 1.1 percent.

Bonds also fell, with the 30-year yield rising 10 basis points to 0.60 percent in Germany and seven basis points to 2.38 percent in the US.

Markets were shaken after Boston Fed President Eric Rosengren said he supported gradual interest rate hikes. He said on Friday that if rate hikes were delayed, there is a risk that some asset markets like commercial real estate may “become too ebullient”.

This comes a day after DoubleLine Capital Chief Investment Officer Jeffrey Gundlach said “interest rates have bottomed” and told investors to be defensive.

Earlier on Friday, most Asian markets also fell after North Korea conducted another nuclear test. The KOSPI was predictably the worst hit, falling 1.3 percent.

Markets fall as ECB leaves rates unchanged

Markets were mostly lower on Thursday.

The S&P 500 fell 0.2 percent and the STOXX Europe 600 fell 0.3 percent after the European Central Bank left interest rates unchanged at its monetary policy meeting on Thursday.

Earlier, Asian markets were mixed. The Nikkei 225 fell 0.3 percent but the Shanghai Composite rose 0.1 percent after a report showed that Chinese imports rose in August for the first time in almost two years.

German bund yields and the euro rose on Thursday after the ECB announced its decision but economists Simon MacAdam and John Higgins at Capital Economics think the euro will weaken in due course.

“First, we don’t think it will be long before the ECB extends its asset purchase program, which is on track to expire in March 2017. Second, we expect the Fed to hike U.S. rates significantly,” they wrote in a note.

However, ECB President Mario Draghi himself did not hint at an extension of its asset purchases at the news conference following the monetary policy meeting.

Indeed, some analysts worry that extending asset purchases risks distorting market prices. Bloomberg cites analysts at Bank of America “who argue that the ECB's Corporate Sector Purchase Programme (CSPP) could lower company borrowing costs to levels that would spark a wave of leveraged buyouts (LBOs), creating volatility in credit spreads that could shake investors' faith in the central bank and confidence in the market”.

The BofA analysts wrote that that “would be a very challenging type of event risk for the ECB to manage and could sap their enthusiasm for continuing with CSPP”.

Markets mixed as German industrial production falls

Markets were mixed on Wednesday.

The S&P 500 fell less than 0.1 percent and the Nikkei 225 fell 0.4 percent but the STOXX Europe 600 rose 0.3 percent.

The European Central Bank meets on monetary policy on Thursday. Despite Germany reporting on Wednesday that its industrial production fell 1.5 percent in July, the most in almost two years, analysts had low expectations for action from the ECB.

“There’s every indication they should ease further, but no indication they will at this point,” said Megan Greene, chief economist at Manulife Asset Management.

Markets rise as Fed rate hike expectations recede further

Markets were mostly higher on Tuesday.

The S&P 500 rose 0.3 percent, the Nikkei 225 rose 0.3 percent and the Shanghai Composite rose 0.6 percent.

However, the STOXX Europe 600 fell 0.3 percent.

A report from the Institute for Supply Management showing that its US nonmanufacturing index fell to 51.4 last month, its lowest reading since February 2010, boosted stocks by lowering expectations for a Federal Reserve rate hike soon.

The yield on the US 10-year Treasury note fell to 1.544 percent from 1.597 percent on Friday while the US dollar fell.

“Much like its manufacturing cousin, the non-manufacturing ISM poured cold water on expectations for a Fed rate hike later this month, and also called into question the strength of the economy heading into the fall,” said Jennifer Lee, a senior economist at BMO Capital Markets.

Russian stocks hit record as oil rises

Markets rose on Monday.

Stocks rose on the back of cooling US rate hike expectations. The Nikkei 225 rose 0.7 percent as Bank of Japan Governor Haruhiko Kuroda signalled its already massive stimulus programme would continue.

Russia's Micex Index also gained 0.7 percent, hitting a second consecutive record high, as oil prices rose after Saudi Arabia and Russia agreed to cooperate in world oil markets.

"Freezing production is one of the preferred possibilities, but it does not have to happen specifically today," Saudi Energy Minister Khalid al-Falih said.

Volatility a buy as markets look vulnerable

As markets become expensive, some investors are buying volatility instead.

From Bloomberg:

With the global hunt for yield getting increasingly difficult as stock market valuations rise, investors are trying to protect their returns while limiting how much risk they take on. That has led the DNB team to go underweight stocks and global bonds, buy CBOE VIX October contracts and boost cash holdings.

“It’s vulnerable,” Varran said in an interview at his office in Oslo. “We see much more that can drag the market down than we see positive surprises. We can’t see where they could come from.”

Stocks rise as Fed seen less likely to raise rates after US August jobs report

Markets were mostly up on Friday.

The S&P 500 rose 0.4 percent, the STOXX Europe 600 jumped 2 percent and the MSCI Emerging Markets Index climbed 1 percent.

US 10-year Treasury yields rose three basis points to 1.60 percent.

However, US employment rose by 151,000 in August, less than forecast and a 275,000 gain in July.

Bill Gross, manager of the Janus Global Unconstrained Bond Fund, said a Federal Reserve rate hike in September “is on” but Mariann Montagne, a senior investment analyst at Gradient Investments Group, said the latest economic data “indicate the Fed is less likely to raise rates” and Scott Mather, chief investment officer of US core strategies and a managing director at Pimco, said that “September is very unlikely”.

Traders lowered the probability of a Fed rate hike in September to 32 percent on Friday from 34 percent before the jobs data.

Markets mixed as US manufacturing contracts but Chinese manufacturing rebounds

Global markets saw another mixed performance on Thursday.

Both the S&P 500 and STOXX Europe 600 were flat while Asian markets were mixed.

Economic data on Thursday were also mixed.

In the US, the Institute for Supply Management said its index of manufacturing activity fell to 49.4 in August from 52.6 in July, indicating contraction.

However, China reported that its manufacturing PMI hit 50.4 last month, its highest level since October 2014.

Markets mixed amid falling oil and rising rate hike expectations

Markets were mixed again on Wednesday.

The S&P 500 fell 0.2 percent to end August with a 0.1 percent decline.

The STOXX Europe 600 fell 0.4 percent to end August with a 0.5 percent gain.

The Nikkei 225 jumped 1 percent to end August with a 1.9 percent gain.

While falling oil prices and rising expectations for interest rate hikes have been giving the stock market hiccups, Oppenheimer's head of technical analysis Ari Wald is bullish on stocks.

"The technical setup is very strong here," Wald told CNBC on Tuesday.

Markets mixed, faces risk of significant selloff

Markets were mixed again on Tuesday.

The S&P 500 fell 0.2 percent and the Nikkei 225 slipped 0.1 percent but the STOXX Europe 600 rose 0.5 percent.

US crude oil fell 1.3 percent as the US dollar rose for the third consecutive day.

“By all appearances, the move down in the market today is driven by a stronger dollar and heightened expectations of a rate hike by the Fed this year,” said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management.

However, some analysts think that the Fed will not hike in September.

Kully Samra, managing director at Charles Schwab, said: “The economy is in a strong place—they’re in a strong place to hike in September—but given the track record we’ve seen, I think it’s unlikely.”

Still, now may not be the best time to buy stocks.

Mark Hulbert at MarketWatch reminds us that September is the worst month for US stocks while Michael Brush, also at MarketWatch, says that there is likely to be a significant selloff over the next two months.

Markets mixed as US consumer holds up economy

Markets were mixed on Monday.

The S&P 500 rose 0.5 percent but the STOXX Europe 600 fell 0.2 percent and the MSCI Emerging Markets Index fell 0.6 percent.

US Treasuries rose. Two-year Treasury yields fell four basis points to 0.81 percent while the 30-year yield dropped seven basis points to 2.22 percent.

West Texas Intermediate crude fell 1.4 percent as the US dollar gained against the euro and yen.

US markets were boosted by a report on Monday showing that consumer spending increased for a fourth consecutive month in July.

Noting the contrast to business spending, which have been falling, John Schoen at CNBC said that “the only thing standing between the U.S. and another recession is the American consumer”.

This echoes the comment by Bill Gross, who earlier this month told Bloomberg: “The economy, absent consumer spending, is basically in a recession.”

Fed to stick with current monetary toolkit

When the next recession hits the US economy, expect more of the same from the Federal Reserve. From Bloomberg:

Faced with disappointing growth after years of ultra-low interest rates, Federal Reserve Chair Janet Yellen and her peers who met this weekend in Jackson Hole, Wyoming, re-affirmed their belief in power of monetary policy to stop economies from slipping into deflation. They were less keen on academic proposals that included the abolition of cash, raising their inflation targets, or keeping permanently large balance sheets.

However, Fed officials did recommend more help from the fiscal side.

During the meeting Yellen and three regional Fed bank presidents -- Robert Kaplan of Dallas, Eric Rosengren of Boston and Loretta Mester of Cleveland -- all urged fiscal policy makers to step up.

The Fed may need that help soon: ZeroHedge reports that JP Morgan sees a 37 percent chance of a recession in the next 12 months.

US stocks and bonds fall as Yellen sees stronger case for higher rates

US markets fell on Friday.

The S&P 500 Index fell 0.2 percent and US 10-year Treasury yields rose five basis points to 1.62 percent.

Markets fell after Federal Reserve Chair Janet Yellen cited “continued solid performance of the labor market” in saying that the “case for an increase in the federal funds rate has strengthened in recent months” in her speech on Friday at a meeting of central bankers and economists in Jackson Hole.

Federal Reserve Vice Chairman Stanley Fischer told CNBC on Friday that the US economy has strengthened and is “reasonably close to what is thought of as full employment”.

He added that Yellen's comments were consistent with the possibility of as many as two rate hikes this year.

Investors wait for Jackson Hole meeting amid debate over wider impact of Fed policy

Global markets were subdued on Thursday ahead of the start of a central bankers' meeting in Jackson Hole on Friday.

The S&P 500 fell 0.1 percent while crude oil rose 1.2 percent.

Central bankers are not the only ones attending the meeting in Jackson Hole. The Fed Up coalition, a pro-workers group, will also be at the meeting sidelines.

A paper published on Monday that Fed Up organiser Jordan Haedtler co-wrote with Dartmouth College economist Andrew Levin and the Economic Policy Institute’s Valerie Wilson recommended that it is “appropriate” for the Fed to consider employment and wages in setting the course of monetary policy “but the transcripts of FOMC meetings provide little evidence that Fed officials have actually done so”.

The Richmond Fed's economics writer Helen Fessenden and economist Gary Richardson on Tuesday published an economic brief addressing Fed Up’s concerns, saying that “monetary policy alone is not a sufficient or particularly well-designed tool to address inequality”.

Actually, the Fed has already shown itself willing to go beyond the strict confines of monetary policy, except that it was not to help workers but banks.

Back in 2009, following the Great Recession, John Hussman wrote:

Senator Richard Shelby made an important observation last week that the Federal Reserve's intervention in the Bear Stearns' wipeout dangerously crossed the line from monetary policy to fiscal policy. I couldn't agree more. The Fed's actions in that case were outside of its mandate precisely because by taking Bear's assets into its own portfolio, the Fed effectively provided public funds to a private corporation without recourse if the collateral goes bad. Only Congress has that power. It was literally an illegal act, but it was also done so quickly that it was presented as an irreversible fait accompli...

Markets mixed, investors cautious

Markets were mixed on Wednesday.

The S&P 500 fell 0.5 percent but the STOXX Europe 600 rose 0.4 percent.

In Asia, the Hang Seng Index fell 0.8 percent but the Nikkei 225 rose 0.6 percent.

Commodities declined. US crude oil fell 2.8 percent.

“No one wants to be in the market, they don’t trust the market,” said Craig Hodges, chief executive of Dallas-based Hodges Capital Management, adding: “To me, we are in a bull market and no one realizes it.”

Markets higher but US stocks may be ripe for selloff

Markets were mostly higher on Tuesday

The S&P 500 rose 0.2 percent, boosted by robust housing market data, while European stocks rose 0.9 percent.

"If we continue to keep getting strong economic data it will become hard for the Fed to rationalize not hiking rates," said Erik Wytenus, global investment specialist at JP Morgan Private Bank.

Indeed, Savita Subramanian, equity and quantitative strategist at Bank of America, said on Tuesday: “BofAML interest rate forecasts imply a far more aggressive pace of Fed tightening than is currently priced into the market.”

Subramaniam also noted that “U.S. stocks look expensive versus history on most metrics”, and thinks that the market is ripe for a selloff.

Markets mixed as Fed nears targets but still-low rates a risk

Markets were mixed on Monday.

The S&P 500 fell less than 0.1 percent but the STOXX Europe 600 rose 0.1 percent and the Nikkei 225 rose 0.3 percent.

US crude oil ended a seven-session winning streak to fall 3 percent.

Oil was weighed down by a stronger US dollar after Federal Reserve Vice Chairman Stanley Fischer said on Sunday that “we are close to our targets” and that he expected expect GDP growth to pick up in coming quarters.

That could signal a coming interest rate hike, especially after a Fed staff working paper published over the weeked showed that the Fed would have the scope to respond to an economic shock if the federal funds rate hits a still-low 3 percent in the coming years.

However, Steven Englander, global head of G10 FX strategy at Citigroup, warned in a note on Monday that this actually meant that the Fed would “have almost no ability to offset a shock in current circumstances” since the nominal Fed funds rate is currently at 0.5 percent.

Englander suggested that the paper is another argument to continue stimulating the US economy now so it's in a better shape to weather those futures shocks.

However, Allianz SE’s Mohamed El-Erian, who prefers structural reforms to improve the economy, told Bloomberg on Monday that low interest rates contribute to excessive risk taking and creates a “risk of financial instability down the road”.

US stocks at record highs but "cracks appearing"

Thanks in large part to central bank liquidity, stock markets have been rallying. The S&P 500 in particular have been hitting record highs recently.

With the rally, however, US stocks may have become overvalued.

Paul Lim at Time.com pointed out that the Shiller P/E climbed to 27.3 this month. The last time the Shiller P/E was above 27 was in October 2007, at the start of the last bear market

While overvalued markets do not necessarily presage a market downturn, Citigroup’s head of global credit strategy Matt King wrote in a note over the weekend that there are “some cracks appearing” in the market.

“Central bank liquidity no longer refreshes all the parts it used to,” he wrote. He foresees “ever tighter spreads; ever more hand-wringing over a stagnating global economy; ever greater dysfunction in markets”.

Allianz Chief Economic Adviser Mohamed El-Erian also thinks that monetary policy may be reaching its limits. He told CNBC last week: "We have relied excessively on central banks."

He said that the US government needs to craft structural reforms instead, otherwise there is a risk “we're going to take a turn where slow growth turns into recession”.

Markets fall, emerging market debt "rings alarm bells"

Markets were mostly lower on Friday.

The S&P 500 fell 0.1 percent and the STOXX Europe 600 fell 0.8 percent.

US 10-year Treasury yields rose four basis points to 1.58 percent after San Francisco Federal Reserve President John Williams said the central bank’s September meeting is “in play” for a rate hike.

The US dollar gained 0.3 percent against the yen and the euro.

However, oil rose, with West Texas Intermediate crude rising 0.6 percent.

Emerging markets also slipped on Friday.

That should not be surprising. Bloomberg reported that global stock markets have become increasingly correlated.

And similarly for bond markets. As more bonds globally are trading with negative yield, investors poured more money into emerging market debt funds over the last week.

However, this means that a Federal Reserve rate hike could be problematic.

The Bank for International Settlements warned in a report on Thursday that “the high indebtedness of EMEs’ corporate sector rings alarm bells”. It noted that the “high level of corporate debt has contributed to overheating in some of these economies”.

It added that scheduled repayments are expected to rise sharply from 2016. This means that the refinancing capacity of highly leveraged companies is “likely to be tested soon, especially if the rise of the US dollar continues”.

Markets rise, US stocks step into "danger level"

Markets were mostly higher on Thursday.

The S&P 500 rose 0.2 percent and the STOXX Europe 600 rose 0.7 percent as US crude rose 3.1 percent.

Earlier on Thursday, however, the Nikkei 225 tumbled 1.6 percent.

While US stocks rose on Thursday, a CNBC report suggests that the rally in stocks may have peaked.

It said that the advance-decline line of stocks on the New York Stock Exchange, which had risen to its highest in more than 12 months recently, has turned a touch lower, indicating a loss of momentum.

Breadth has also declined, with 76 percent of the sub-industries in the S&P Composite 1500 trading above their 50-day moving averages on Tuesday, down from 95 percent on 15 July.

All this is occurring as investors have become more optimistic. The AAII Investor Sentiment Survey and US Investors Intelligence survey showed bullishness among investors rose in the last week to 35.6 percent and 56.2 percent respectively.

The Investors Intelligence newsletter's co-editor John Gray said the above-55 percent level of bullishness "is considered the danger level" for the stock market.

US and Japanese stocks rise but BoJ reaching limits of bond-buying

Markets were mixed on Wednesday.

In the US, the S&P 500 rose 0.2 percent and the 10-year Treasury yield fell three basis points after minutes of the Federal Reserve’s last meeting showed that officials saw little risk of a sharp rise in inflation.

West Texas Intermediate crude rose for a fifth day, gaining 0.5 percent.

In Europe, the STOXX Europe 600 fell 0.8 percent.

In Asia, the Shanghai Composite was flat but the Nikkei 225 rose 0.9 percent as the yen halted its rally.

While investors on Wednesday welcomed the dovish turn in prospects for US monetary policy, there appears less scope for a more dovish Japanese monetary policy. According to a Bloomberg report, Japan’s biggest banks are running out of room to sell their government bond holdings.

“Banks are the first port of call” as the BOJ seeks to boost its JGB holdings by 80 trillion yen annually, said Shuichi Ohsaki, the chief rates strategist at Bank of America Merrill Lynch in Tokyo. “But they’re losing capacity to cut beyond those that are reaching maturity.”

Stocks fall after investors move back into equities

Stocks fell on Tuesday.

The S&P 500 fell 0.6 percent while the STOXX Europe 600 fell 0.8 percent. The MSCI Emerging Markets Index fell less than 0.1 percent.

US Treasuries also fell, with the yield on the 10-year note rising two basis points to 1.57 percent.

US stocks remain near record highs though even as regulatory filings showed that big-name hedge fund investors like George Soros, Jeffrey Gundlach, Carl Icahn and David Tepper slashed their long equity positions in the second quarter.

However, investors have become more bullish recently. According to a Bank of America Merrill Lynch Fund Manager Survey released on Tuesday, cash positions for August fell to 5.4 percent of portfolios, down 0.4 percentage point from July, as fund managers adjusted to an overweight position on US stocks.

US stocks at record highs, at risk of stalling or breakout?

Stocks were mixed on Monday.

In the US, the Dow Jones Industrial Average and the S&P 500 both rose 0.3 percent to close at record highs. The Nasdaq Composite rose 0.6 percent to also close at a record high.

European stocks were flat though while the Nikkei 225 fell 0.3 percent after a report on Monday showed that Japan's economy stalled in the April-June quarter.

However, the Shanghai Composite surged 2.4 percent after the China Securities Regulatory Commission said on Friday that the Shenzhen-Hong Kong Stock Connect scheme would be launched this year.

While US stock indices are at record highs, some analysts think that the market may be about to stall.

"There is some risk that we're approaching stall speed here," Art Cashin, director of UBS floor operations at the New York Stock Exchange, told CNBC on Monday.

Allianz Global Investors' Kristina Hooper also told CNBC that there are "certainly a lot of question marks" around the rally but added that "stocks are the most attractive asset class among a sea of relatively unattractive asset classes".

Similarly, Mary Ann Bartels, head of portfolio strategy at Merrill Lynch Wealth Management, said she expects greater "episodic volatility" but thinks that there "is no other alternative" to US stocks.

And yet, Bloomberg points out that there are features in the latest rally that is making the bull market look more sustainable.

From last week’s confluence of record highs to rebounding growth stocks, there’s a lot to like in a market as hated as this one.

No longer are low-volatility stocks the leaders. Nor are utilities, or companies that sell toothpaste and handsoap. Nary a defensive share is rallying as leadership in the S&P 500 Index switches from the dividend-paying bond surrogates that ruled 2015 to technology, banks and commodity firms that benefit from an expanding economy.

Bank of Japan becoming top shareholder in Japan

One problem with prolonged quantitative easing by a central bank is not just that financial markets become distorted but economies also become distorted.

Bloomberg reports that the Bank of Japan is set to become the top shareholder in Japanese companies.

Already a top-five owner of 81 companies in Japan’s Nikkei 225 Stock Average, the BOJ is on course to become the No. 1 shareholder in 55 of those firms by the end of next year, according to estimates compiled by Bloomberg from the central bank’s exchange-traded fund holdings. BOJ Governor Haruhiko Kuroda almost doubled his annual ETF buying target last month, adding to an unprecedented campaign to revitalize Japan’s stagnant economy.

This poses risks for the economy.

“The BOJ being a stable shareholder of such a large ratio of stocks is going to make investors question if governance is being held to account, and the debate around this is going to get more aggressive as they increase holdings,” Sumitomo Mitsui’s Ichikawa said. “People are going to question how long the BOJ should keep this policy going.”

Stocks mixed, Fed rate hike looks "off the table"

Markets were mixed on Friday.

Asian stocks rose following a strong lead from the US on Thursday. The Nikkei 225 jumped 1.1 percent and the Shanghai Composite Index surged 1.6 percent.

However, the S&P 500 fell 0.1 percent and the STOXX Europe 600 fell 0.2 percent.

US and European stocks fell despite a 2.3 percent rise in US crude oil.

US economic data released on Friday were disappointing. Retail sales were little-changed in July while wholesale prices fell 0.4 percent.

“Based on the PPI and retail-sales figures, all indications now look like a [Federal Reserve] rate increase in 2016 is clearly off the table,” said Tom di Galoma, managing director at Seaport Global Holdings.

US stocks hit record highs but Chinese stocks down amid bank recapitalisation

Stocks were mostly higher on Thursday.

In the US, the S&P 500, Dow Jones Industrial Average and Nasdaq Composite Index all rose to record highs, rising 0.5 percent, 0.7 percent and 0.5 percent respectively.

US stocks were boosted by a 4.3 percent jump in US crude oil and a report showing a drop in weekly jobless claims.

European stocks also rose. The STOXX Europe 600 0.8 percent.

Earlier, though, Asian stocks were mixed. The Shanghai Composite fell 0.2 percent but the Hang Seng Index rose 0.4 percent.

Bloomberg had mixed news for China on the banking front.

The good news is that the capital raises have begun. The bad news is that they need to continue.

An analysis of 765 banks in China by UBS Group AG shows that efforts to clean up the country's debt-ridden financial system are well underway, with as much as 1.8 trillion yuan ($271 billion) of impaired loans shed between 2013 and 2015, and 620 billion yuan of capital raised in the same period. But the work is far from over, as to reach a more sustainable debt ratio the Chinese banking sector will still require up to 2 trillion yuan of additional capital as well as the disposal of 4.5 trillion yuan worth of bad loans, according to the Swiss bank's estimates.

And bad loans could continue to pile up from continuing malinvestments. According to Bloomberg, Morgan Stanley has noted that fixed-asset investment growth among China's state-owned enterprises has accelerated across the board in 2016, with the exception of mining.

George Magnus, senior economic adviser at UBS, wrote: "Capital accumulation isn't all or always wrong but if it's largely debt financed and SOE provided, I'd say that malinvestment is still hard at work."

Stocks fall with VIX near lows

Stocks closed lower on Wednesday.

The S&P 500 fell 0.4 percent, dragged down by the energy sector as US crude oil fell 2.5 percent.

The STOXX Europe 600 fell 0.2 percent, its first decline after five consecutive days of gains.

Asian stocks also fell. The Nikkei 225 and the Shanghai Composite Index both fell 0.2 percent.

Stocks have been drifting lower amid low trading volumes. “Volumes have been very low as investors seem to be waiting for major market catalysts,” said Angus Nicholson, a market analyst for IG, in a note on Wednesday.

The quiet market is making some investors uneasy. CNN Money reports:

The closely-watched VIX volatility index recently slipped below 11.4, touching its lowest level in more than two years. By comparison, the measure of market turbulence was sitting at nearly 31 last September and it's almost never been in single digits.

Some see this, along with a string of record highs for the American stock market, as a sign that investors have become so comfortable with the state of things that they don't see the dangers that lurk around them. They argue this is the calm before the storm, especially given nervousness about the global economy, the upcoming U.S. elections and Corporate America's yearlong profit recession.

On the other hand, Mark Hulbert thinks that the concerns over the low VIX reading is unwarranted.

According to data from the CBOE, Hulbert said that the stock market’s return whenever the VIX falls below 12 is virtually the same as it is whenever the VIX is above its historical median of 18.6.

Nasdaq at record, DAX in bull market, debt funds buybacks

Stocks mostly rose on Tuesday.

In the US, the S&P 500 was flat but the Nasdaq Composite rose 0.2 percent to hit a record high.

In Europe, the STOXX Europe 600 rose 0.9 percent as the DAX jumped 2.5 percent to put it in a bull market.

In Asia, the Nikkei 225 and Shanghai Composite Index both rose 0.7 percent.

Stocks rose despite US crude oil falling 0.6 percent.

The yield on the US 10-year Treasury note declined to 1.545 percent from 1.587 percent on Monday.

Low bond yields could keep the stock bull market alive by encouraging companies to use debt markets to finance stock buy-backs. From Bloomberg:

Led by Apple Inc. and CBS Corp., S&P 500 constituents have rushed to sell bonds to finance the repurchases of their own stock. The proportion of buybacks funded by debt rose above 30 percent in June for the first time since 2001, data compiled by JPMorgan Chase & Co. and Bloomberg show.

Stocks flat, investors showing neither optimism nor fear

Stock markets were mostly flat on Monday.

The S&P 500 fell 0.1 percent and the STOXX Europe 600 rose 0.1 percent.

Asian stocks showed substantial gains earlier in the day though. The Nikkei 225 in particular soared 2.4 percent.

While US stocks pulled back on Monday, United Capital CEO Joe Duran told CNBC that stocks might see a "surprisingly strong" end of the year.

"The market does not go down when people want it to go down. It goes down when everybody is incredibly optimistic. We're not seeing that," he said.

On the other hand, UCX's co-founder and chief economist Jack Bouroudjian thinks that there is "a lot of complacency out there".

"When I see the VIX under 12, when I see the weekly VIX pushing 7, that tells me there is no fear in this marketplace and that is something to worry about," Bouroudjian told CNBC.

China debt and currency problems

Christopher Balding wrote that China cannot solve its debt problem.

China's public finances are in worse shape than is commonly understood. And as debt levels rise and the economy remains sluggish, the government's ability to boost growth looks increasingly precarious. Without reform, that will have some grim consequences.

Problems could show up in its currency. Indeed, Bloomberg reported that Mark Hart of Corriente Advisors has been betting against China’s currency for seven years.

Hart’s case, in a nutshell, is this: China’s currency is wildly overvalued. By some accounts, the yuan’s real effective exchange rate vs. the dollar is twice as high as it was two decades ago and almost 40 percent higher than it was in 2008. Hart foresees a one-off devaluation of at least 30 percent, maybe more, with consequences worse than those of the global financial crisis. Otherwise, he says, Beijing will just burn through foreign exchange reserves trying to fight a losing battle.

S&P 500 hits new high, time to "take profits" from emerging markets

Markets rose on Friday.

The S&P 500 rose 0.9 percent to a new all-time high after the Labor Department reported that US employment increased by 255,000 last month. The Nasdaq Composite Index also hit a record high.

Elsewhere, the STOXX Europe 600 rose 1.1 percent and the MSCI Emerging Markets Index gained 0.6 percent.

Indeed, after lagging US stocks for the past five years, emerging markets have been outperforming the S&P 500 this year.

However, Crossing Wall Street blog editor Eddy Elfenbein told CNBC that it is a good time to "take some profits off the table".

BoE cuts interest rates, expands bond-buying

The Bank of England increased monetary stimulus on Thursday, citing the need to cushion the economy from the UK's impending exit from the European Union.

The BoE lowered interest rates by 25 basis points to a record-low 0.25 percent. It also announced plans to buy 60 billion pounds of government bonds with newly-created money over the next six months as well as 10 billion pounds of high-grade corporate debt.

"Today's decision will test the limits of monetary policy which many would argue ran out of runway some time ago," said Bill Michael, global head of financial services at KPMG.

At least investors seem impressed by the BoE's move. The FTSE 100 jumped 1.6 percent on Thursday while the pound fell against both the dollar and the euro.

However, the US stock market gave up modest gains in the morning to finish flat.

Prior to the BoE decision, Asian stocks had also risen, with the Nikkei 225 rising 1.07 percent.

Stocks mixed, oil bear market may be short-lived

Stocks were mixed on Wednesday.

The S&P 500 rose 0.3 percent but earlier in the day, the Nikkei 225 plunged 1.9 percent.

US stocks were boosted by a 3.3 percent jump in US crude oil.

Indeed, the bear market in oil may turn out to be short-lived.

Bloomberg reported that investors this week paid the smallest premium in almost two months to protect against a drop in prices through the end of the year.

Andy Hall told investors in his hedge fund, Astenbeck Capital Management, that “extreme positioning coupled with improving fundamentals should ultimately – and at potentially any time – result in a strong reversal”.

Markets fall as oil extends decline

Markets fell on Tuesday.

The S&P 500 fell 0.6 percent, the STOXX Europe 600 fell 1.3 percent and the MSCI Asia Pacific Index fell 0.4 percent.

Oil continued to decline with West Texas Intermediate crude falling 1.4 percent.

US 10-year Treasury yields increased by three basis points to 1.56 percent after Japanese bonds sold off.

Stocks fall with oil in bear market

Stock markets mostly fell on Monday.

The S&P 500 fell 0.1 percent and the STOXX Europe 600 fell 0.6 percent.

However, the Nikkei 225 rose 0.4 percent.

In the US, stocks were dragged down by a fall in oil prices. West Texas Intermediate crude fell 3.7 percent, leaving it down 21.8 percent from a 52-week high hit in early June and putting it in a bear market.

In a note on Monday, analysts at Tradition Energy wrote that traders are focusing on “near glut levels of supply”. Reuters reported on Friday that OPEC's oil output in July likely reached its highest in recent history.

US stock rally underpinned by bonds even as risk-reward for Treasuries looks "horrific"

As the US stock market hovers near record highs, Jeff Sommer at the New York Times said that the bond and foreign exchange markets have provided the underpinnings for the stock rally.

“Bonds have risen sharply in value, and their yields, which move in the opposite direction, have plummeted,” he wrote. “That has made stock prices look cheap and dividends generous.”

In addition, the strong dollar has made stock sectors that are fairly impervious to exchange-rate shifts especially attractive, he said.

However, Sommer quoted Craig Moffett, a senior analyst at MoffettNathanson, as saying: “Many of the valuations in the market don’t make sense right now in isolation. The risk for investors is that if interest rates start to rise, stock prices could start to shift almost overnight.”

Indeed, Jeffrey Gundlach, the chief executive of DoubleLine Capital, said on Friday that stock investors have entered a “world of uber complacency”.

In an interview with Reuters, he said that the risk-reward ratio for Treasuries is “horrific” and there is “no upside” in Treasury prices.

He suggested that investors “sell everything”. He added: “Nothing here looks good.”

S&P 500 near record high even as BoJ looks like "spent force"

The US stock market hovered near record levels on Friday after a mixed session.

The S&P 500 index closed up 0.2 percent to 2,173.60, just under last Friday’s all-time closing high of 2,175.03, after briefly touching a record intraday high of 2,177.13. However, the Dow Jones Industrial Average fell 0.1 percent.

US economic data on Friday were disappointing. The economy grew at a slower-than-expected 1.2 percent annual growth rate in the second quarter while first-quarter growth was revised to a 0.8 percent annual rate from the previous estimate of 1.1 percent growth.

Elsewhere, the STOXX Europe 600 Index fell 0.9 percent while the Nikkei 225 rose 0.6 percent.

Earlier, though, the Nikkei had fallen as much as 1.8 percent amid disappointment over the Bank of Japan's decision to limit additional stimulus to just enlarging its programme of buying exchange traded funds by 2.7 trillion yen a year.

“The market expected more,” said Hisao Matsuura, chief strategist at Nomura Japan.

However, some doubt that more would be helpful anyway.

Michael Schuman wrote that BoJ Governor Haruhiko Kuroda “has already thrown everything into his fight to save Japan”. The BoJ already holds a third of all outstanding government bonds, yields on many of these bonds are already negative, and the total assets of the BoJ have more than doubled in just the past three years.

Schuman suggested that “three years into his radical program to restart Japan, the BOJ might just be a spent force”.

Similarly, Ivan Martchev wrote: “Given that the Japanese have run a QE program since 2013 that is three times more aggressive than the Fed's QE program (relative to the size of GDP), and officials have still not gotten the results they were looking for is rather telling.”

“It may be simply too late for Japan,” he added.

Stocks flat in US, fall in Europe and Japan

US stocks were relatively flat on Thursday.

The Dow Jones Industrial Average fell 0.1 percent but the S&P 500 rose 0.2 percent.

The rise in the S&P 500 leaves it just 0.2 percent from its record high.

Despite that, Michael Scanlon, managing director at Manulife Asset Management, thinks that “it doesn’t seem like there’s a tremendous amount of upside”.

Indeed, elsewhere, the STOXX Europe 600 fell 1 percent and the Nikkei 225 fell 1.1 percent.

Markets mixed, economy at risk from collapse in asset prices

Markets were mixed on Wednesday.

The S&P 500 fell 0.1 percent after the Federal Reserve held short-term interest rates steady but the STOXX Europe 600 rose 0.4 percent.

In Asia, the Nikkei 225 jumped 1.7 percent after Prime Minister Shinzo Abe announced a ¥28 trillion stimulus package but the Shanghai Composite Index tumbled 1.9 percent following a report that China's banking regulator was considering clamping down on the nation's multi-trillion-dollar wealth management products market.

In the US, investors are apparently already wary of the risk in stocks, rotating out of them and into bonds in the week to 20 July, according to data from the Investment Company Institute.

Todd Rosenbluth, director of ETF & mutual-fund research at S&P Global Market Intelligence, said that “investors appear to be getting nervous as the bull market ages”.

Indeed, Greg Ip at the Wall Street Journal is concerned that the economy is again under the sway of asset prices.

The past two recessions were ushered in by a collapse in asset prices. The risk of a repeat is growing...

[N]et wealth in the U.S. now tops 500% of national income. Ominously, net wealth has reached that level only twice before: from 1999 to 2000 during the Nasdaq bubble, and 2004 to 2008 during the housing boom...

[W]hen valuations are so high, even justifiably so, it takes only a small shift in the appetite for risk, expectations of profits, or interest rates to trigger a major downdraft. The U.S. Treasury’s Office of Financial Research noted this week that stocks have reached today’s valuations “only ahead of the three largest equity market declines in the last century.”

US earnings recession set to continue

Markets were mixed on Tuesday.

In the US, the Dow Jones Industrial Average slipped 0.1 percent while the S&P 500 was flat.

Elsewhere, the STOXX Europe 600 rose 0.1 percent but the Nikkei 225 fell 1.4 percent.

The US stock market was weighed down on Tuesday by disappointing corporate earnings. McDonalds in particular fell 4.5 percent after reporting weaker-than-expected same-store sales in the latest quarter.

According to FactSet, earnings for companies in the S&P 500 are on track to contract 4.5 percent in the second quarter from the prior year, marking the fifth consecutive quarter of earnings declines. That is actually better than the 5.3 percent fall expected by analysts as of 30 June 30.

However, S&P 500 earnings are now expected to decline in the third quarter as well, thus extending the earnings recession to six quarters.

Markets mixed, Japan and China struggle to stimulate economies

Markets were mixed on Monday.

The S&P 500 fell 0.3 percent while the STOXX Europe 600 rose 0.2 percent.

Asian markets were little changed, with the Nikkei 225 marginally lower and the Shanghai Composite Index up 0.1 percent.

The Bank of Japan is widely expected to add montary stimulus when it meets this week, even though massive monetary and fiscal stimulus have so far failed to spur faster growth as the government struggles with a debt burden that is the world's heaviest and a population that is the world's oldest.

China has also been trying to keep monetary policy loose but may be facing liquidity trap.

Michelle Lam, an analyst at Lombard Street Research, wrote in a note on Monday that "our measure of broad money...has deteriorated on a year-on-year basis, and fell below its level in 2013-14 and the government’s target".

China's "unprecedented" credit growth a risk for global credit

China's economy grew 6.7 percent in the first half of the year, unchanged from the first quarter. Unfortunately, this has come at the expense of even more debt in the economy. From Reuters:

As China's economy notches up another quarter of steady growth, the pace of credit creation grows ever more frantic for every extra unit of production, as inefficient state firms swallow an increasing share of lending...

"The amount of debt that China has taken in the last 5-7 years is unprecedented," said Morgan Stanley's head of emerging markets, Ruchir Sharma, at a book launch in Singapore. "No developing country in history has taken on as much debt as China has taken on on a marginal basis."

Another report from Reuters says that China's debt is a risk for global credit.

Chinese companies will consume nearly two-thirds of new credit raised globally by 2020 as the world's second-largest economy leans on the corporate sector to support growth, said a report from S&P Global published on Thursday.

The report highlighted China's opaque and ever-expanding corporate sector and rapidly rising U.S. leveraged finance as key tail risks for global credit, with outstanding debt forecast to expand by half to $75 trillion by 2020.

However, it is not just China. Christopher Langner at Bloomberg says that debt is an Asia-wide problem.

Millions of words have been expended on China's debt problem. Two points need making: The danger is Asia-wide. And if an implosion is coming, it's most likely in the next three years.

Global markets mixed but US looks "solid"

Markets were mixed on Friday.

The S&P 500 rose 0.5 percent to hit another record high but the STOXX Europe 600 fell 0.1 percent and the Nikkei 225 tumbled 1.1 percent.

“This recent rally has been so dependent on expected support from central banks, so there’s definitely an element of nervousness to it,” said James Athey, investment manager at Aberdeen Asset Management.

However, David Stubbs, global market strategist at JP Morgan Asset Management, said that while confidence in the UK has taken a hit after its Brexit referendum, “the situation in the U.S. remains one of solid, steady data”.

In addition, Oppenheimer's head of technical analysis Ari Wald told CNBC that many stocks are participating in the market rally, indicating a “resumption of strength like it did in 1995, 2003, 2009 and 2012”.

“All-time highs are bullish,” Wald said. He sees the S&P going to 2,250 by the end of 2016.

Stocks fall amid signs of exuberance

Markets were mostly down on Thursday.

The S&P 500 fell 0.4 percent, as did the Dow Jones Industrial Average, ending its nine-day rally.

Elsewhere, the STOXX Europe 600 fell less than 0.1 percent while the Nikkei 225 rose 0.8 percent.

Investors are unperturbed by the decline on Thursday.

"We've got a long way to run but this is a breather that we need, quite frankly," said Ben Willlis of Princeton Securities Group.

Maybe investors are becoming overconfident. Bloomberg sees signs of exuberance in stocks.

The S&P 500 and Dow Jones Industrial Average both closed at record highs on Wednesday and a peek at the underbelly of market flows and sentiment suggests that a sense of euphoria has enveloped investors.

Stocks rise as indices in US and Hong Kong point to new bull markets

Markets rose on Wednesday.

The S&P 500 rose 0.4 percent to close at a record high.

The STOXX Europe 600 rose 1.0 percent to a four-week.

Asian stocks were mostly higher. The MSCI Hong Kong Index in particular rose 1.1 percent to push gains since the January low to more than 20 percent, putting the market back in bull market territory.

Indeed, David Moenning said that the US stock market may also be said to be in a new bull market. The Dow Jones Industrial Average has advanced 18 percent from the February 11 low, which meets Ned Davis Research's definition of a bull market.

Markets mixed but US stocks are "only game in town"

Markets were mixed on Tuesday.

The S&P 500 fell 0.1 percent but the Dow Jones Industrial Average rose 0.1 percent, its eighth consecutive gain and its sixth consecutive record close.

Elsewhere, the STOXX Europe 600 fell 0.4 percent but the Nikkei 225 jumped 1.4 percent.

The WSJ's MoneyBeat blog pointed out that US stocks "are looking as stretched as they've been in more than five years", with the S&P 500 P/E ratio at 19.4, the highest since February 2010.

Nevertheless, some analysts think that stock valuations could remain elevated for a while yet. As Convergex noted, US stocks are "the only game in town".

US stocks at fresh highs

US stock markets closed at fresh highs on Monday amid otherwise-lacklustre global markets.

The S&P 500 rose 0.2 percent, as did the MSCI world equity index.

However, oil fell. Brent crude settled 1.37 percent lower while US crude fell 1.55 percent.

The US 10-year Treasury yield declined 1 basis point to 1.585 percent while the 10-year Bund yield fell 3 basis points to -0.023 percent.

While US stocks remain resilient, the run of record highs for the US stock market "doesn't make much sense", distressed debt specialist Marc Lasry told CNBC on Monday.

However, Lasry said that the market may be signalling a stronger-than-expected US economy.

Indeed, even the usually-bearish John Hussman wrote on Monday that while stock valuations indicate roughly zero nominal total returns for the S&P 500 on a 10-12 year horizon, "our near-term outlook is rather neutral, largely because enough trend-following components have improved".

US Treasuries stumble, but rally may resume

US Treasury prices fell last week, with the 10-year yield jumping 22.7 basis points to 1.594 percent.

The fall last week reversed the rally that had sent yields to record lows.

Analysts are divided on where bonds go from here.

Last week, Tom di Galoma, managing director at Seaport Global Holdings, lowered his 10-year yield outlook for the next six to nine months from 1.4 percent to 0.9 percent.

“Treasurys are just too cheap compared to a lot of global debt,” said di Galoma. “As the yields on global debt get more and more negative, we will rally more and more.”

Buying from Japanese investors appears to have been a major driver of the rally. Japan’s Ministry of Finance reported on Wednesday that Japanese investors last week bought $25.4 billion worth of US debt.

However, James Kochan, chief fixed-income strategist at Wells Fargo Funds Management, thinks that the 10-year yield will end the year between 1.75 percent and 2 percent as the US economy shows signs of improvement.

“The post Brexit [global] rally was temporary,” said Kochan. “But the selloff would come domestically.”

Markets mixed after record-breaking run amid "bear capitulation"

Markets were mixed on Friday.

The S&P 500 fell 0.1 percent, ending a run of four consecutive record closes, but the Dow Jones Industrial Average rose 0.1 percent to an all-time high.

The STOXX Europe 600 fell 0.2 percent but the MSCI Emerging Markets Index rose 0.2 percent.

The US 10-year Treasury yield rose six basis points to 1.60 percent.

West Texas Intermediate crude rose 0.6 percent but gold fell 0.4 percent.

Despite the weak performance on Friday, stocks have made a strong run recently. Bank of America Merrill Lynch reported in a note on Friday titled “Bear Capitulation” that investors last week poured the most cash into global equity funds since October last year and the second highest amount ever into emerging market bond funds.

Meanwhile, the Wall Street Journal reported that “market professionals are generally cautiously optimistic that the U.S. bull market ... is primed for an extended run”.

“So far,” said Douglas Coté, chief market strategist for Voya Investment Management, “2016 is reminiscent of past stealth bull markets, climbing a wall of worry despite obstacles in its way.”

US stocks hit new highs amid "mass psychosis"

Stocks rose on Thursday.

The S&P 500 rose 0.5 percent to hit its fourth consecutive record high. The Dow Jones Industrial Average rose 0.7 percent for its third consecutive record high.

Elsewhere, the STOXX Europe 600 rose 0.8 percent as the Bank of England left interest rates unchanged while the Nikkei 225 rose 1 percent.

The US stock market's record-breaking run has not impressed some asset managers.

"I don't think we should be at new highs," said Larry Fink, CEO of BlackRock, the world's largest asset manager.

Jeff Gundlach, founder of Doubleline Capital, said the recent moves were the result of "a mass psychosis going on related to the so-called starvation for yield".

S&P 500 hits record high on low rates

Stocks rose on Monday, with the S&P 500 in particular hitting a record high.

The S&P 500 rose 0.3 percent to 2137.16, breaking a record that had remained intact since May 2015.

In Japan, the Nikkei 225 surged 4 percent after Japanese Prime Minister Shinzo Abe’s ruling coalition won more seats in the upper house.

In Europe, the STOXX Europe 600 jumped 1.6 percent while the FTSE 100 rose 1.4 percent to put it back in bull market territory.

“Ultralow rates are just driving the stock market,” said Bruce Bittles, chief investment strategist at Robert W. Baird.

Russ Koesterich, head of asset allocation for BlackRock’s Global Allocation Fund, thinks that “the ability to move higher going forward is going to come down to a better economy and stronger earnings growth”.

Some analysts are skeptical the market can continue to move higher.

“Markets have become very dovish relative to what central banks might deliver and against the current macro backdrop,” Goldman Sachs said in a note on Monday. “Bonds could sell off sharply as a result of central bank disappointment, positive inflation and data surprises and/or illiquidity, which would likely drive weakness in equities and other risky assets, at least initially.”

To John Hussman, the recent optimism among investors is a “mistake”. In his latest commentary on Monday, he wrote that “the main factor driving financial markets here is a yield-seeking race to the bottom” and that while prices have been driven higher in the near term, future prospects for investment returns have been “obliterated”.

S&P 500 approaches record high but faces earnings test

After a strong rebound that has taken it back to its all-time high, the US stock market faces challenges in maintaining the rally.

The S&P 500 rose 1.3 percent last week to 2,129.9, just 0.2 percent below the 2,134.72 high reached in May 2015, after briefly trading above the latter on Friday.

In the process, the S&P 500 has erased the losses suffered following the referendum in the UK where voters chose to leave the European Union.

Patti Domm at CNBC wrote that stocks “could easily break out to new highs in the week ahead, as earnings become the next test for the market”.

“I think we're going to go higher over the next few months. I think we're going to go to 2,200. We're going to have a breakout in optimism,” said James Paulsen, chief investment strategist at Wells Capital Management. “I think economic momentum is returning.”

Wharton professor of finance Jeremy Siegel thinks so too. “If we get a good second half of the year earnings-wise, then I think the market could be up 10 to 15 percent,” Siegel told CNBC on Friday.

That optimism is not shared by Matt Kadnar at GMO. Kadnar told Brett Arends at MarketWatch that the overall investment outlook is dismal. “There is no asset out there that is cheap,” said Kadnar.

And investors may not be as optimistic as the advance in the S&P 500 would suggest. CNBC noted that the recent rally in the S&P 500 has been driven by defensive sectors such as utilities, telecom and consumer staples.

“That could be a precursor to an economic slowdown,” it suggested.

Stocks and bonds rise after strong jobs gain

Stocks were mostly up on Friday.

The S&P 500 rose 1.5 percent. It briefly rose above its record closing level in intraday trading after being boosted by a report that US nonfarm payrolls rose by 287,000 in June, the biggest increase since October.

Elsewhere, the STOXX Europe 600 jumped 1.6 percent but the Nikkei 225 fell 1.1 percent.

Despite the strong employment report, US Treasuries also gained, with the 10-year yield falling to a record low of 1.366 percent.

“The economy is chugging along, creating some jobs, but the Fed is still unlikely to do anything for a while,” said Erik Davidson, chief investment officer at Wells Fargo Private Bank.

Markets mixed, US recession looms amid low bond yields and continuing profit declines

Markets were mixed again on Thursday.

The STOXX Europe 600 rose 1.1 percent but the S&P 500 fell 0.1 percent and the Nikkei 225 fell 0.7 percent.

US crude oil weighed on stock markets, tumbling 4.8 percent.

The US 10-year Treasury yield rose to 1.387 percent, up for a second day.

Still, low bond yields have already triggered recession concerns.

“Recession unfortunately looms, that is what the bond market tells us,” Steve Cortes, chief strategist at BGC, told FOX Business Network.

“Yields are going the wrong way really quickly,” said Dan North, chief economist at Euler Hermes North America. “We don’t see a recession in 2016 but it raises concerns for 2017.”

In the meantime, the earnings recession in the US is already about to hit the one-year mark. Second-quarter profits from S&P 500 companies are expected to decline by 5 percent, the fourth-straight quarterly drop, according to S&P.

Markets mixed as flattening yield curve trigger recession concerns

Markets were mixed on Wednesday.

The S&P 500 rose 0.5 percent and the Shanghai Composite Index rose 0.4 percent but the STOXX Europe 600 fell 1.7 percent and the Nikkei 225 fell 1.9 percent.

US crude oil rose 1.8 percent while the yield on the US 10-year note rose to 1.385 percent from 1.367 percent on Tuesday.

While bond yields rose on Wednesday, they remain near record lows, a sign to many that the economy may be close to a recession.

“Whenever we see the yield curve flatten like we are seeing right now, that usually signals a market that's anticipating a recession and further monetary stimulus from the central banks,” said Craig Erlam, senior market analyst at Oanda.

“Given the historical tendency of a very flat or inverted yield curve to precede a U.S. recession, the odds of the next economic downturn are rising,” wrote a team of Deutsche Bank analysts.

Markets fall as bond yields tumble to record lows

Markets fell on Tuesday.

The S&P 500 fell 0.7 percent, the STOXX Europe 600 fell 1.7 percent and the Nikkei 225 fell 0.7 percent.

There were pockets of strength among stocks, with the FTSE 100 gaining 0.4 percent and the Shanghai Composite Index rising 0.6 percent.

Nevertheless, the general shift from risk was clear.

US crude oil plunged 4.9 percent while gold rose 1.5 percent and the US 10-year Treasury yield fell to a record low of 1.367 percent.

And bond yields continued their declines early on Wednesday with Japan’s 20-year government bond yield dropping to zero for the first time. The 10-year note yield fell to a record minus 0.265 percent, while the 30-year yield reached an unprecedented 0.03 percent.

Markets mixed, analysts see subdued second half year

Markets were mixed on Monday.

Precious metals led commodities higher, with silver in particular surging as much as 7 percent before settling with a 2.9 percent gain.

However, Brent crude slipped 0.5 percent.

In equities, the Shanghai Composite Index jumped 1.9 percent but the STOXX Europe 600 fell 0.7 percent.

The US stock market was closed on Monday having closed on Friday at 2103 and analysts see little further improvement for the rest of the year.

Eighteen equity strategists tracked by research firm Birinyi Associates expect the S&P 500 to finish the year at roughly 2150. That forecast is down from a forecast of 2200 at the beginning of the year.

Markets rise as central banks look at further easing

Markets rose on Friday to continue their post-Brexit rebound.

The S&P 500 rose 0.2 percent, the STOXX Europe 600 rose 0.7 percent, the FTSE 100 jumped 1.1 percent and the Shanghai Composite Index crept up 0.1 percent.

Commodities rose, with silver surging as much as 6.3 percent and West Texas Intermediate crude closing 1.4 percent higher.

The yield on US 10-year Treasuries fell three basis points to 1.444 percent.

“As bad as things have gotten, central banks have talked about new types of easing -- that’s going to keep a bid under equities,” said Andrew Brenner, head of international fixed income at National Alliance Capital Markets.

Mohamed El-Erian, the chief economic adviser at Allianz SE, told Bloomberg that US 10-year yields “can go to 1.25 percent quite easily if we continue to see this combination of more central bank activism and a slowdown in Europe”.

China stocks rise but interest rates may fall

The Shanghai Composite Index rose 0.1 percent on Friday to complete a 2.7 percent rise for the week.

Despite the recovery in the stock market, China's bond traders are betting on more monetary stimulus. From Bloomberg:

Expectations a plunging euro and rising political uncertainty in Europe will hurt demand for Chinese products is boosting speculation the People’s Bank of China will take steps to ease monetary policy. Australia & New Zealand Banking Group Ltd., Standard Chartered Plc and Commerzbank AG all say the nation will probably lower banks’ reserve requirements as soon as July, while one-year interest-rate swaps, a gauge of rate expectations, fell the most last month since April 2015.

The latest data on China's economy have been mixed. The manufacturing PMI slipped to 50 in June from 50.1 in May but the non-manufacturing PMI rose to 53.7 from 53.1.