US bull market to continue into 2018

Analysts remain bullish on the US stock market.

Bank of America Merrill Lynch sees the current bull market continuing into 2018.

In a report to clients, Michael Hartnett, chief investment strategist at BofAML, said that he expected “full investor capitulation into risk assets” on better-than-expected corporate earnings, pushing the S&P 500 to a peak of around 2,863 next year.

Similarly, Goldman Sachs sees the the S&P 500 closing next year at 2,850.

“Our 'rational exuberance' rests on a combination of above-trend US and global economic growth, low albeit slowly rising interest rates, and profit growth aided by corporate tax reform likely to be adopted by early next year,” wrote David Kostin in a report to clients.

S&P 500 hits record high but valuations “stretched”

Markets were mixed on Friday.

The S&P 500 rose 0.2 percent to another record high but the STOXX Europe 600 slipped 0.1 percent.

“The reason stocks are rising is because of earnings. The beat rates so far have been so high suggesting that corporate profits across sectors have been growing so quickly, even analysts can’t keep up,” said Crista Huff, chief analyst at Cabot Undervalued Stocks Advisor.

However, strategists at Société Générale “expect stretched valuations and rising bond yields to limit equity index performances in 2018 and the prospect of a U.S. economic slowdown in 2020 to further cramp returns in 2019”.

While US stocks have continued to make new highs despite overvaluation concerns, new research reported by Bloomberg suggests that stock prices often miss true value by a “significant margin” but that over the longer term, “reversion dominates”.

Asian markets mixed as China steadies after Thursday plunge

Asian markets were mixed on Friday.

The Nikkei 225 reversed early losses to close up 0.12 percent while the Shanghai Composite rose 0.06 percent.

On Thursday, the Shanghai Composite had plunged 2.3 percent while the Shenzhen Composite fell 2.9 percent after the Chinese government took steps to stop the proliferation of small online lenders following an earlier announcement that it planned to streamline oversight of asset-management products sold by financial instutitions.

Markets mixed, Fed seen dovish

Markets were mixed on Wednesday.

The S&P 500 fell less than 0.1 percent while the STOXX Europe 600 fell 0.3 percent but the Nikkei 225 rose 0.5 percent.

Market mood was kept subdued as the Federal Reserve released minutes on Wednesday of its last monetary policy meeting, which showed that the Fed viewed a “near-term” increase in interest rates as possible but that officials were concerned about persistently low inflation.

“Overall, we read the November minutes as dovish,” said a team of BNP Paribas economists led by Paul Mortimer-Lee.

Markets rise, US stocks hit record highs

Markets rose on Tuesday.

The S&P 500 rose 0.7 percent to a record high, the STOXX Europe 600 rose 0.4 percent and the Nikkei 225 rose 0.7 percent.

With the stock market rally resuming, Goldman Sachs sees another strong year in 2018 if the US Congress passes tax reform.

Peter Costa, president of Empire Executions, told CNBC that while stocks are overpriced, “I don't think there's anything within the next couple of months that we're going to see that's going to slow [the market] down”.

However, Vanguard chief economist Joe Davis wrote that the “sky is not falling, but our market outlook has dimmed”. Vanguard expects returns in the medium term of 4 to 6 percent, the most cautious outlook it has had on future stock returns at any time during the post-financial crisis economic recovery.

Markets mixed entering favourable season in “dangerous” environment

Markets were mixed on Monday.

The S&P 500 rose 0. percent and the STOXX Europe 600 rose 0.7 percent but the Nikkei 225 fell 0.6 percent.

“Earnings growth, especially revenue growth, continues to support U.S. equities,” said Diane Jaffee, senior portfolio manager at TCW.

Similarly, Robert Doll, chief equity strategist at Nuveen Asset Management LLC, said in his weekly outlook that “the two most important drivers of equity markets — corporate earnings and real growth levels — still support a risk-on investment stance”.

European stocks rose despite the collapse of talks to form a coalition government in Germany, with the DAX 30 closing with a 0.5 percent gain after being down 0.5 percent earlier in the session.

Indeed, Michael Santoli at CNBC wrote that “bears may have missed their last chance to feast on 2017's stock market”.

“Beginning this week, seasonal tendencies start turning in favor of stocks,” he said. “As long as the published projections of 11 percent further profit gains hold up for the first half next year and don't start seeming to need the help of a big, immediate tax-cut effect, it's tough to see the market failing in a dramatic way.”

However, strategists at investment bank Societe Generale think that investors are too optimistic.

Alain Bokobza, head of global asset allocation at Societe Generale, said that “investors continue to push asset prices, volatility and leverage to historical extremes” but that “a low volatility carry environment with rather extreme positioning is a dangerous combination, which we recently likened to dancing on the rim of a volcano”.

Bokobza expects “to enter a bear equity market environment” and for the S&P 500 to fall 22.5 percent from its Monday levels to 2,000 by the end of 2019.

S&P 500 seen rising this week, could finish year strong

The S&P 500 fell 0.1 percent last week, its second consecutive weekly decline.

This week could see a better performance though, according to Patti Domm at CNBC.

“Stocks have a good chance of trading higher in the week ahead, if the typical Thanksgiving holiday week trading patterns take over,” she wrote.

Citing data from Bespoke, she said that the S&P 500 has averaged a gain of 0.6 percent during Thanksgiving week and has been higher 75 percent of the time since 1945.

She also quoted Paul Hickey, co-founder of Bespoke, as saying: “The historical trend is a strong stock market through the year, tends to finish strong.”

Stocks fall but oil jumps, US housing starts surge

Markets were mixed on Friday.

The S&P 500 fell 0.3 percent, the STOXX Europe 600 fell 0.3 percent but the Nikkei 225 rose 0.2 percent.

However, oil rose. West Texas Intermediate crude surged 2.6 percent and Brent jumped 2.2 percent.

Also providing positive news for investors on Friday was a report showing that US housing starts surged 13.7 percent in October. Housing starts is a leading indicator of the economy.

Still, Michael Gapen of Barclays said that “we would not expect this type of momentum to persist”.

Meanwhile, European Central Bank President Mario Draghi said in a speech in Frankfurt that the “euro area is in the midst of a solid economic expansion” but with inflation subdued, “we still need a patient and persistent approach to our monetary policy”.

Markets rise, ready for “another assault higher”

Markets rose on Thursday.

The S&P 500 rose 0.8 percent, the STOXX Europe 600 rose 0.8 percent and the Nikkei 225 jumped 1.5 percent.

Investor sentiment was boosted by news that the US House of Representatives passed a bill to overhaul the US tax code.

Neil Wilson, senior market analyst at ETX Capital, wrote in a note that the recent pullback “looks more like a technical correction before another assault higher, rather than the start of a more significant selloff”.

However, Michael Hewson, chief market analyst at CMC Markets UK, wrote that “major indices are starting to show signs of fatigue” and that “it wouldn’t take much more of a push for markets to fall even further”.

Markets fall with oil, may be “opportunity to buy”

Markets fell on Wednesday.

The S&P 500 fell 0.6 percent, the STOXX Europe 600 fell 0.5 percent and the Nikkei 225 plunged 1.6 percent.

Falling oil prices dragged stock markets down. Energy stocks in the S&P 500 fell 1.2 percent as West Texas Intermediate crude fell 0.8 percent after the US Energy Information Administration on Wednesday reported that domestic crude supplies rose by 1.9 million barrels for the week ended 10 November.

Some analysts remain sanguine.

“Any pullback at this stage should be viewed as an opportunity to buy,” said Karyn Cavanaugh, senior market strategist at Voya Financial.

Still, other analysts expect further declines.

“While this is not a reflection of a sustained downward move, a little pullback is possible given uncertainty about the tax plan and also the Fed policy, which right now differs from market expectation,” said Shannon Saccocia, chief investment strategist at Boston Private.

Markets fall amid signs of “irrational exuberance”

Markets fell on Tuesday.

The S&P 500 fell 0.2 percent and the STOXX Europe 600 fell 0.6 percent.

The Nikkei 225 was flat but most other Asian markets fell.

A survey by Bank of America Merrill Lynch showed that a record net 48 percent of investors say stocks are overvalued but a net 16 percent say they are taking on above-normal levels of risk, also an all-time high.

“A record-high percentage of investors say equities are overvalued yet cash levels are simultaneously falling, an indicator of irrational exuberance,” said Michael Hartnett, the bank’s chief investment strategist.

That may be leaving markets vulnerable.

“Overstretched valuations, tighter monetary policies, geopolitical risks, a slowdown and high debt levels in China, and low inflation are some of the factors that could potentially trigger a market correction,” said Hussein Sayed, chief market strategist at FXTM.

Also, Matt Maley, equity strategist with Miller Tabak, told CNBC that the US stock market could be impacted if the “very, very” overbought Japanese stock market declines further.

Markets mixed, analysts shrug off “profit-taking”

Markets were mixed on Monday.

The S&P 500 rose 0.1 percent but the STOXX Europe 600 fell 0.7 percent and the Nikkei 225 plunged 1.3 percent.

Kathleen Brooks, research director at City Index, said that volatility is “maybe starting to build again”.

However, most analysts remain optimistic on markets.

Tareck Horchani, global head of sales trading at Saxo Capital Markets, said that recent price action is “just profit-taking”.

Katie Stockton, chief technical strategist at BTIG, wrote: “A pullback in the 2%-3% range might be enough to relieve the market of ‘overly bullish’ sentiment without generating a lot of breakdowns or affecting positive intermediate-term momentum.”

Euro area growth may gain further strength

Last week, the European Commission raised it forecast of economic growth for the euro area in 2017 to 2.2 percent from 1.7 percent in May. That would make it the fastest growth rate in a decade.

Now, private sector economists are adding to the optimism.

“This is euro-area growth at its best,” said Nathan Sheets, a former international economist at the Federal Reserve and US Treasury.

“There’s good cause to think euro-area growth can gather further strength in 2018,” said economists at Credit Suisse.

“Absent an unexpected shock, we should see several more years of economic growth,” said Angel Talavera, an economist at Oxford Economics.

Markets fall on possible delay in US tax cuts

Markets fell on Friday.

The S&P 500 fell 0.1 percent, the STOXX Europe 600 fell 0.4 percent and the Nikkei 225 fell 0.8 percent.

The market declines were largely attributed to concerns about a possible delay in the President Donald Trump's much-anticipated corporate tax cuts.

“Markets have had a direct correlation to the tax plan, and have been falling on signs that progress is slowing down, and the idea that corporate taxes will be cut later than we had been expecting,” said Richard Sichel, chief investment officer at Philadelphia Trust Co.

However, Michael McCarthy, chief market strategist at CMC Markets, said in a note: “Safe haven assets were only mildly bid, suggesting this is corrective action rather than an unfolding reversal.”

Stocks fall as junk bonds break down

Markets fell on Thursday.

The S&P 500 fell 0.4 percent, the STOXX Europe 600 fell 1.1 percent and the Nikkei 225 fell 0.2 percent.

The falls on Thursday were mostly attributed to uncertainty over US tax reforms but some analysts are concerned that a leading indicator for stocks is breaking down.

Matt Maley, equity strategist at Miller Tabak, noted that the iShares high-yield corporate bond exchange-traded fund has fallen below its 200-day moving average over the past week, and “this raises some concerns in my mind”.

The SPDR Bloomberg Barclays High Yield Bond ETF also fell below its 200-day moving average early this month, confirming a divergence between junk bonds and stocks, which had been rallying.

Marty Fridson, CIO at Lehmann Livian Fridson Advisors, said: “Can you have a little bit of a correction here just because things have gotten super tight? Yes.”

Still, Fridson said economic fundamentals remain fairly solid and does not expect a major decline for stocks.

Similarly, Maley did not think that the fall in junk bonds signify a major problem for stocks just yet but said he would be watching for further signs of weakness.

Markets mixed as bank stocks fall

Markets were mixed on Wednesday.

In the US, the S&P 500 rose 0.1 percent but bank stocks fell. The SPDR S&P bank exchange-traded fund fell 0.7 percent, its fourth straight decline, amid growing concerns that recent Republican electoral losses could hinder the party's push to reform the US tax code.

Elsewhere, the STOXX Europe 600 dipped less than 0.1 percent and the Nikkei 225 fell 0.1 percent.

“Most of the earnings are already out,” said Maris Ogg, president at Tower Bridge Advisors. “I wouldn't be surprised if the market holds here for a bit since the news flow is pretty meager.”

Nikkei surges but markets subdued elsewhere

Markets were mixed on Tuesday.

The S&P 500 was flat, the STOXX Europe 600 fell 0.5 percent but the Nikkei 225 surged 1.7 percent.

Sandy Villere, a portfolio manager at St. Denis J. Villere & Company, said that “the market is getting stretched on valuations” but added that “if the tax cuts come through, the market will look a lot cheaper than it is”.

Meanwhile, Andrew Bresler, deputy Asia Pacific head of sales trading at Saxo Capital Markets, sees a Goldilocks climate, saying that there are “few risks on the horizon”.

Markets rise as they head for “spectacular finale”

Markets rose modestly on Monday.

The S&P 500 and STOXX Europe 600 rose 0.1 percent while the Nikkei 225 was up less than 0.1 percent.

Bonds also rose, with the US 10-year Treasury yield declining two basis points to 2.316 percent.

Oil rose, West Texas Intermediate gaining 3.1 percent to hit its highest level since June 2015.

While the gains on Monday were small, Sue Chang at MarketWatch said that “tax cuts along with robust earnings may be setting stocks up for what could be a truly spectacular finale to a memorable year”.

“This is a very constructive situation for the big picture investment story. We could be going into a brief period of piling up, where sentiment ignores valuation and sticks to momentum,” she quoted Richard Hastings, macro strategist at Seaport Global, as saying.

Indeed, strategists at Academy Securities wrote that the biggest worry on Wall Street right now might be that no one is worried.

S&P 500 on winning streak as it enters strong season

The S&P 500 closed at a record high on Friday after rising 0.3 percent over the week.

The weekly gain was the S&P 500's eighth in a row, its longest weekly winning streak in four years.

Analysts at LPL Research think that stocks will continue to rise after the S&P 500 rose over 6 percent during the May to October period this year.

They noted that in the years when the six-month period from May to October was up at least 5 percent, the historically strong November to April period gained an average 9.2 percent compared to its usual 7 percent gain.

In contrast, Phil Streible, senior market strategist at RJO Futures, thinks that the winning streak may be coming to an end.

“I think you have to watch the retail sector from Black Friday on to the end of the year,” Streible told CNBC on Friday. “That could be what starts to show some of the cracks there in the foundation, and I think markets start to pull back.”

Meanwhile, other analysts are concerned with high market valuations.

Noting that the S&P 500's cyclically adjusted price-earnings ratio has risen above 30, Graham Hacche at the National Institute for Economic and Social ­Research said that “markets may have become increasingly vulnerable to shocks”.

Markets hit records but at risk from overheating

Markets were mostly up on Friday.

The S&P 500 rose 0.3 percent to close at another record high while the STOXX Europe 600 rose 0.3 percent as the DAX 30 and FTSE 100 closed at record highs.

However, Asian stocks were mixed. The Hang Seng rose 0.3 percent but the Shanghai Composite fell 0.4 percent.

A report on Friday showed that US employment rose 261,000 last month while the unemployment rate fell to 4.1 percent from 4.2 percent the previous month.

“There was a good amount of jobs growth, a notable decline again in the unemployment rate, all of which sends the clear message that the labor market is tight,” said Charles Lieberman, chief investment officer of Advisors Capital Management.

Indeed, Torsten Slok, Deutsche Bank's chief international economist, thinks that global economic growth is strong and that the biggest risk is inflation.

“I think that the irony of all this is that the risks are not so much of a recession; the risk that we are facing in the markets today is there's a significant bigger risk of overheating,” he told CNBC on Thursday.

Markets mixed, BoE raises rates

Markets were mixed on Thursday.

The S&P 500 was flat, the STOXX Europe 600 fell 0.5 percent and Asian stocks were mixed.

The Bank of England decided to raise its benchmark interest rate to 0.5 percent from 0.25 percent at its monetary policy meeting on Thursday.

Markets rise as Fed leaves rates unchanged and year end beckons

Markets rose on Wednesday.

The S&P 500 rose 0.2 percent, the STOXX Europe 600 rose 0.4 percent and the Nikkei 225 soared 1.9 percent.

The Federal Reserve left interest rates unchanged at its monetary policy meeting on Wednesday but markets are expecting a rate hike in December.

“What they're doing is giving everyone a chance to prepare themselves for a December rate hike,” said Anthony Conroy, president at Abel Noser.

However, Wharton School finance professor Jeremy Siegel told CNBC on Tuesday that tax reform has not been completely priced into the market and could drive the market higher. “I think we're going to get to 24,000” for the Dow Jones Industrial Average, he said.

Indeed, with the year-end season here and market trend strong, many analysts are confident of further gains for stocks, with Strategas technical analyst Todd Sohn seeing a possible market melt-up.

Markets rise as impressive earnings lead to bullish outlook

Markets mostly rose on Tuesday.

The S&P 500 rose 0.1 percent and the STOXX Europe 600 rose 0.3 percent.

However, the Nikkei 225 was flat as the Bank of Japan concluded its meeting on Tuesday by leaving monetary policy unchanged.

In the US, consumer stocks led gains after Mondelez and Kellogg reported better-than-expected results.

“You look at the earnings out of these big players and they continue to impress,” said Steve Chiavarone, portfolio manager with Federated Investors in New York. “It strikes me that that leads you to a much more bullish outlook for the fourth quarter.”

Indeed, Charles Dumas, chief economist at Lombard Street Research, suggested that there is a notion among investors that “the chief risk in today’s markets is missing what remains of the cyclical upside”.

“So the big risk is a new bubble, not a near-term bear market,” he wrote.

Markets mixed, Spanish stocks surge

Markets were mixed on Monday.

The S&P 500 fell 0.3 percent after a report showed that the House of Representatives is considering phasing in a cut to corporate taxes rather than enacting them immediately.

The STOXX Europe 600 rose 0.1 percent. Spain's IBEX 35 led the rise, jumping 2.4 percent after the Spanish government ousted leaders in Catalonia on Friday in reaction to separatist lawmakers declaring the region an independent republic.

In Asia, the Nikkei 225 was flat but the Shanghai Composite fell 0.8 percent.

Stocks to go “8-10 percent higher” by end next year with earnings growth

There is still life in the current bull run in the stock market, according to Brian Nick, chief investment strategist at Nuveen.

Nick told CNBC recently that the next couple of months could become bumpy for stocks as good news headlines go away and the markets deal with uncertainty over factors such as tax reform.

However, further ahead, he sees more gains for stocks.

“If you're looking forward into the end of next year, the light is still green for the U.S. economy and for corporate profits,” he said.

“Between now and then, we see the markets anywhere between 8 percent and 10 percent higher, and that's basically in-line with our expectations for earnings growth,” he added.

Markets rise, no alternative to owning stocks seen

Markets mostly rose on Friday.

The S&P 500 rose 0.8 percent while the Nasdaq Composite surged 2.2 percent, both closing at record highs after better-than-expected quarterly results from Amazon, Microsoft, Alphabet and Intel.

The STOXX Europe 600 rose 0.6 percent but the IBEX 35 fell 1.5 percent amid tension over Catalonia's proposed independence.

The Nikkei 225 rose 1.2 percent to close at a two-decade high but the S&P/ASX 200 fell 0.2 percent after a court ruling that ousted five lawmakers left the Australian government without a majority.

Despite yet another record high on Wall Street, Brian Levitt, senior investment strategist at OppenheimerFunds, does not think that the US stock market is particularly overvalued.

“You look at the earnings yield of stocks compared to the Treasury yield, it's not clear that there's an alternative to owning the equity market,” he told Business Insider.

Markets rise as ECB to continue bond buying at reduced pace

Markets rose on Thursday.

The S&P 500 rose 0.1 percent, the STOXX Europe 600 jumped 1.1 percent and the Nikkei 225 rose 0.1 percent.

Stocks rose despite the ECB announcing a reduction in its monthly bond purchases.

“If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the asset purchase programme in terms of size and/or duration,” the ECB said in a statement after its monetary policy meeting.

“It turns out the dove camp is the clear winner here in the sense that they got the flexible or open-end of the QE program. That is why the euro is falling and equity markets are reacting so positively,” said Manuel Ortiz-Olave, FX market analyst at Monex Europe.

Markets fall as bonds face “moment of truth”

Markets mostly fell on Wednesday.

The S&P 500 fell 0.5 percent, the STOXX Europe 600 fell 0.6 percent and the Nikkei 225 fell 0.5 percent.

“It is clear that markets are reacting to some disappointing earnings, because the economic picture remains robust,” said Randy Frederick, managing director of trading and derivatives at Schwab Center for Financial Research.

However, investors may also be getting nervous about interest rates. The yield on the 10-year Treasury note rose 3.8 basis points to 2.444 percent on Wednesday after DoubleLine Capital Chief Investment Officer Jeffrey Gundlach tweeted on Tuesday that the “moment of truth has arrived for secular bond bull market”.

“If inflation ticks up [and] central banks respond, then I think we have a much more volatile picture,” Bessemer Trust's chief investment officer Rebecca Patterson said on CNBC on Tuesday.

Indeed, Ravi Menon, managing director of the Monetary Authority of Singapore, told Bloomberg on Tuesday that risks “have been manifesting” and “those risks are being underestimated”.

Markets mixed but “no alternative to equities” despite risk of pullback

Markets were mixed on Tuesday.

The S&P 500 rose 0.2 percent and the Nikkei 225 rose 0.5 percent but the STOXX Europe 600 fell 0.4 percent.

“For the most part, earnings across sectors are coming in strong,” said John Brady, managing director at R.J. O’Brien & Associates. “I’m not concerned about valuations yet,” he added, pointing out that “there is just no compelling investment alternative to equities right now.”

However, Jeff Reaves at MarketWatch warned that there are troubling signs for the stock market.

“Those who aren’t prepared for a market crash — or at least a 10% to 20% correction — may be caught flat-footed and suffer serious portfolio declines as a result,” he said

And the market could be due for a pullback, according to Katie Stockton, chief technical strategist at BTIG.

“If we close lower sometime this week, then, the downside risk will increase,” Stockton said.

Nevertheless, Stockton thinks that the “long-term positive momentum is there” and “we think any pullback is an opportunity to add exposure to U.S. stocks”.

Markets mixed but earnings a “solid tailwind”

Markets were mixed on Monday.

The S&P 500 fell 0.4 percent to end a six-day winning streak.

However, elsewhere, the STOXX Europe 600 rose 0.2 percent and the Nikkei 225 jumped 1.1 percent after Japanese Prime Minister Shinzo Abe's ruling coalition secured a two-thirds majority at Sunday's election.

The decline in US stocks on Monday did little to dampen optimisim.

“Earnings remain a solid tailwind for equity prices,” said Robert Doll, chief equity strategist at Nuveen Asset Management LLC, in a note.

Avi Gilburt, an Elliott Wave technical analyst and author of ElliottWaveTrader.net, does expect a pullback in the coming weeks but then expects the market to “rally into the end of the year”.

US stock market record-breaking run could keep going

The S&P 500 rose 0.9 percent last week to end at another record high, and many analysts think it can go even higher.

The S&P 500 rose 0.5 percent on Friday on hopes of tax cuts and Doug Gordon, senior portfolio manager at Russell Investments, thinks that tax reform in the US could keep the bull market going.

“I don't think we have it fully priced in as of yet,” Gordon told CNBC last week referring to the tax reform.

Gordon suggested that non-US developed equities “look modestly more attractive” than US equity markets.

However, sounding a cautionary note, Gordon said that the market has moved into the late stages of the bull run and that the market “could get those irrational exuberance kind of moments” but “I don't think we're quite there yet”.

Indeed, most analysts remain optimistic.

“We are getting more calls from our clients asking us whether they should sell their stocks rather than buy them, because they are scared. This is not what you normally see at market tops,” noted Maris Ogg, president at Tower Bridge Advisors, who thinks that the market could continue to climb for another couple of years.

Meanwhile, Bespoke Investment Group noted that “2017 is tied for the fifth most closing highs on record, dating back to 1929” and that “there’s the potential for more”.

Still Ogg did warn that there is risk of a sudden drop in profit margins. While net profit margin was 9.5 percent in the third quarter and close to a record high, Ogg sees wage pressure “building up”.

Indeed, John Hussman, President of Hussman Investment Trust, warned in a recent article that “the process of profit margin normalization is already underway”, driven by a low unemployment rate and the demographic constraint of a slow-growing labour force.

Without the boost from a rising profit margin and with valuation already “2.75 times their historical norms”, Hussman warned that “the S&P 500 is likely to post negative total returns over the coming 10-12 year horizon, with a likely interim loss in excess of -60%”.

Markets rise as Trump trade reignited amid “synchronized expansion” in global economy

Markets rose on Friday.

The S&P 500 rose 0.5 percent to a record high after the US Senate passed a budget blueprint for the next fiscal year to pave the way for tax cuts.

The STOXX Europe 600 rose 0.3 percent despite continuing concerns over the issue of Catalonian independence from Spain.

The Nikkei 225 rose less than 0.1 percent ahead of an election on Sunday but that was still its 14th consecutive gain.

“The Trump trade has been reignited, so it seems. Tax reform is definitely back on—if it was ever off, thanks to the Senate approving of the Republican-backed budget Thursday night,” said Neil Wilson, senior market analyst at ETX Capital, in a note.

“The global economy has now entered a synchronized expansion for the first time in many years, and the usual macro fears are largely absent,” wrote Bill Miller, portfolio manager at Miller Opportunity Trust mutual fund on Wednesday. “This has underpinned a global bull market in stocks without (yet) triggering a significant rise in interest rates.”

“Low interest rates coupled with still solid earnings growth suggest valuations can remain high amid a tame business cycle, absent an exogenous shock,” said Third Point's Dan Loeb.

Markets mixed as US stocks rebound after losses elsewhere

Markets were mixed on Thursday.

Early in the day in Asia, the Nikkei 225 rose 0.4 percent but the Hang Seng Index tumbled 1.9 percent and the Shanghai Composite fell 0.3 percent after a report showed that China's economy grew 6.8 percent in the third quarter, down from 6.9 percent in the second quarter.

The STOXX Europe 600 fell 0.6 percent as the China data combined with an escalation of political tension in Spain and disappointing corporate results to drag stocks down.

However, the S&P 500 managed to rebound from early declines to finish flat.

“While there is no question that markets are overvalued and we could see some corrections, the path of least resistance for stocks is still to go higher,” said Jack Ablin, chief investment officer at BMO Private Bank.

Stocks rise amid positive global earnings trends and flattening yield curve

Markets rose on Wednesday.

The S&P 500 rose 0.1 percent, the STOXX Europe 600 rose 0.3 percent and the Shanghai Composite rose 0.3 percent.

“Overall, earnings are coming in very nicely,” said Wayne Kaufman, chief market analyst at Phoenix Financial Services.

“Economic data globally is confirming positive earnings trends,” said Maris Ogg, president of Tower Bridge Advisors.

Luiz Sauerbronn, director of the investments group at Brandes Investment Partners, said that European corporate profitability is “starting to recover now” while valuations are “very attractive relative to the US”.

One risk, though, is a flattening yield curve.

CNBC reported that this week, the spread between 2-year note yields and 10-year yields in the US reached near the lowest it has been since before the financial crisis.

Markets mixed but US stocks edge up on positive earnings

Markets were mixed on Tuesday.

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

Positive earnings reports from major companies boosted sentiment in the US.

Karyn Cavanaugh, senior market strategist at Voya Financial, said that “the market is climbing thanks to global growth that’s been driving earnings”.

Bill McNabb, chairman of Vanguard, told the BBC that financial markets “keep reaching new highs” despite valuations being “very high” partly because they had ignored some of the political turbulence around US President Donald Trump's administration.

However, he added: “We expect there could be a decent-sized correction at some point.”

Stocks rise but calm markets could turn “really ugly”

Markets were mostly higher on Monday.

The S&P 500 rose 0.2 percent to another record high while the Nikkei 225 rose 0.5 percent to a 21-year high.

However, the STOXX Europe 600 was flat. The IBEX 35 weighed down the region, falling 0.8 percent after the Spanish government gave Catalonia’s separatist leaders until Thursday to drop their push for independence.

Joanne Masters, senior economist at ANZ, said in a note that while the Federal Reserve may raise interest rates in December, “if goods inflation fails to show up next year, there might not be too many more in a hurry”.

Certainly, investors do not seem too concerned with monetary policy tightening, with markets having “gotten even calmer” in the typically-volatile month of October so far, noted Frank Cappelleri, technical strategist at Instinet.

Still, some analysts are concerned, especially for the US stock market.

Goldman Sach's chief US equity strategist David Kostin said in a note on Friday that the S&P 500 is currently trading in the 88th percentile of historical valuations and expects a “modest contraction” in valuation multiples.

That would mean that for the S&P 500 to rise, fundamental factors such as earnings and book values have to improve, but “a substantial increase in profitability in 2018 will likely require policy tailwinds”.

Meanwhile, William Watts at MarketWatch ponders the possibility of another market crash.

“It’s been three decades since Black Monday, the most disastrous single day in U.S. stock market history,” he wrote on Monday. “Critics charge that fragmentation and liquidity concerns resulting from market structure changes make an eventual rerun a near certainty.”

Joseph Saluzzi, co-founder and co-head of trading at Themis Trading, warned that “when it happens, it’s going to be really, really ugly”.

China could grow influence on global markets but still at risk of financial instability

Emma O'Brien, Garfield Reynolds and Adrian Leung argue that China's influence on global markets will grow.

China makes up more than one-seventh of the global economy, yet its footprint in international portfolios is ludicrously small, with overseas investors owning less than 2 percent of its domestic stocks and bonds. But its insulated markets are slowly becoming more integrated, as President Xi Jinping loosens rules on foreign participation. That push could get further backing at the Communist Party's twice-a-decade congress this month, where the leadership will set policy priorities for the coming five years.

However, People's Bank of China Governor Zhou Xiaochuan warned recently that China is also at risk of financial instability.

“The main problem is that the corporate debt is too high,” Zhou said Sunday during a panel discussion at a Group of 30 seminar in Washington held in conjunction with the International Monetary Fund and World Bank annual meetings.

While debt servicing costs remain low, “we need to pay further effort to deleveraging and strengthen policy for financial stability,” Zhou said.

Markets rise as analysts agree there's no reason to sell

Markets rose on Friday.

The S&P 500 rose 0.1 percent, the STOXX Europe 600 rose 0.3 percent and the Nikkei 225 rose 0.9 percent.

“There’s no reason to sell,” said Randy Frederick, managing director at Schwab Center for Financial Research.

Jack Ablin, chief investment officer at BMO Private Bank, said that “reasonable economic growth with low inflation” indicated that “the path of least resistance is higher”.

Indeed, Doug Ramsey, chief investment officer of the Leuthold Group, noted a “remarkable level of bullish ‘agreement’ across the U.S. stock market”, which he said, “stacks the odds heavily against an imminent cyclical top”.

Markets mixed as good fundamentals may be “priced in”

Markets were mixed on Thursday.

The S&P 500 fell 0.2 percent, the STOXX Europe 600 was flat and the Nikkei 225 rose 0.4 percent.

Gary Droz, managing director at MainLine Private Wealth, said that the “fundamentals are good” but he does not see “a huge spike up” between now and the end of the year because a lot of the optimism “has been priced in”.

US stocks rise to another record high but Europe flat despite secession reprieve in Spain

Markets were mostly higher on Wednesday.

The S&P 500 rose 0.2 percent to close at a record high while the Nikkei 225 rose 0.3 percent to close at a two-decade high.

However, the STOXX Europe 600 was flat despite a 1.3 percent jump in the IBEX 35 after Catalan leader Carles Puigdemont told the Catalan parliament that he was suspending the secession process to negotiate with the Spanish government first.

In the US, investors may have been encouraged by the minutes of the Federal Reserve's last monetary policy meeting released on Wednesday. The minutes showed that several Fed officials thought that inflation may take longer than previously expected to get back to the central bank's target.

Indeed, Yardeni Research's Edward Yardeni thinks that there is now a 55 percent chance the market will continue climbing, up from his estimate of 50 percent about two months ago.

Market rally reaches “epic proportions”, “no brake” in front of it

Markets were mixed on Tuesday.

The S&P 500 rose 0.2 percent while the Nikkei 225 rose 0.6 percent.

However, the STOXX Europe 600 was flat as the threat of of a declaration of independence by Catalonia dragged Spanish stocks down.

“Should we see a repeat of the heavy-handed police tactics like we saw on the referendum day, it could send the Spanish market into a tailspin,” said David Madden, market analyst at CMC Markets UK, in a note.

Elsewhere, though, investors remain ebullient.

Morgan Stanley analysts wrote on Tuesday that the equity market rally “has reached epic proportions” and that while “investors have at times appeared reluctant to embrace the recent rally, there is evidence from last month that risk appetites are increasing”.

Indeed, Jim Paulsen, chief investment strategist at Leuthold Group, told CNBC: “We're just in such a sweet spot because growth keeps going, we're at full employment and yet we've got no aggravation to inflation or interest rates.”

“There's no brake in front of this stock market,” he added.

Stocks mixed but US market “not dislodged easily”

Markets were mixed on Monday.

The S&P 500 fell 0.2 percent but the STOXX Europe 600 rose 0.2 percent while the Shanghai Composite rose 0.8 percent on resumption of trading after being closed for a holiday last week.

Robert Pavlik, chief market strategist for Boston Private Wealth Management, noted that “there’s a bit of weakness in the overall market”.

However, Mohamed El-Erian, chief economic advisor at Allianz, told CNBC on Monday that it would take a big surprise to derail the US stock market rally.

“You need a major shock or a major series of shocks to dislodge this market. This market is not dislodged easily,” he said.

Are US stocks overvalued?

Investors remain divided over whether the US stock market is expensive, based on comments made over the past week.

Berkshire Hathaway chairman and CEO Warren Buffett told CNBC that “valuations make sense with interest rates where they are”.

GW&K Investment Management portfolio manager Aaron Clark said that “valuations are fine, given where we are in terms of inflation”.

Ameriprise Financial's chief market strategist David Joy said: “Valuations are elevated, but you can justify them.”

PNC Asset Management's global chief investment strategist Bill Stone said that “stocks are not wildly overvalued, certainly relative to interest rates”.

However, Gartman Letter editor and publisher Dennis Gartman told CNBC that the stock market is “egregiously overpriced”.

And today, John Hussman, president of Hussman Investment Trust, wrote in an article that “the U.S. equity market is now at the most offensive level of overvaluation in history” and that “it is utterly incorrect” to say that market valuations are justified by low interest rates.

Markets mixed as US employment shrinks

Markets were mixed on Friday.

The S&P 500 fell 0.1 percent, ending an eight-day winning streak, after a report showed that nonfarm payrolls shrank by 33,000 in September, the first monthly decline since 2010.

The STOXX Europe 600 fell 0.4 percent as continued political uncertainty in Spain weighed down the market.

Earlier in Asia though, the Nikkei 225 rose 0.2 percent and the Hang Seng briefly topped 2015's high and touched levels not seen since 2007's record highs.

“Markets had been ludicrously overbought, with the S&P 500 rising for eight straight days by Thursday,” said Michael Antonelli, equity sales trader at Robert W. Baird & Co.

The stock market is “egregiously overpriced,” Dennis Gartman told CNBC on Friday. “I don't care which valuation you put upon it — price to earnings, price to book value, margin usage — the market is extremely high.”

S&P 500 hits record again, “path of least resistance higher”

Markets rose on Thursday.

The S&P 500 rose 0.6 percent, rising for an eighth consecutive session and closing at a record close for the sixth consecutive session after the US Congress passed a budget resolution seen as setting the stage for an overhaul of the tax code.

The STOXX Europe 600 rose 0.2 percent, with Spain's IBEX 35 index surging 2.5 percent despite an ongoing stand-off between the central government and Catalonian secessionists.

In Asia, the Nikkei 225 was flat as markets in China and South Korea were closed for holidays.

“The path of least resistance for markets seems to be higher,” said Aaron Clark, portfolio manager at GW&K Investment Management. He added that “valuations are fine, given where we are in terms of inflation”.

Indeed, PNC Asset Management's global chief investment strategist Bill Stone said that there is scope for a 30 percent upside for US stocks in 2018 based on earnings and corporate bond yield forecasts.

While acknowledging that the odds of such a scenario materialising are very low, Stone said that his calculations “at least tells you that stocks are not wildly overvalued, certainly relative to interest rates”.

In the meantime, though, Bob Pisani at CNBC thinks that the US stocks “are very overbought”.

S&P 500 hits another record, may be on verge of melt-up

Markets were mixed on Wednesday.

The S&P 500 rose 0.1 percent to another record high while the Nikkei 225 also rose 0.1 percent.

However, the STOXX Europe 600 fell 0.1 percent after officials in Catalonia announced their intention to declare independence from Spain.

The relentless record-breaking run of the US stock market has some analysts suggesting that it may be on the verge of a melt-up.

“We make the case that despite the Fed’s intent, we’re on the verge of being in a melt-up stage, fueled by excessive credit and a timid Fed,” wrote technical analyst Jeff deGraaf, chairman of Renaissance Macro Research, in a note on Wednesday.

Similarly, Jeffrey Saut, chief investment strategist at Raymond James, said on Tuesday that the S&P 500 “now appears to be involved in a melt-up”.

However, others note that the US stock market's rise has taken place against the backdrop of a weaker US dollar.

Robert Michaud, chief investment officer at New Frontier Advisors, wrote in a research report that “the dollar has fallen relative to other currencies” and that on a dollar-adjusted basis, the S&P 500 was “significantly below” the high hit in the first quarter of the year.

Markets rise despite elevated valuations and political uncertainty

Markets rose on Tuesday.

The S&P 500 rose 0.2 percent to a record high, the STOXX Europe 600 rose 0.2 percent for its ninth consecutive gain and the Nikkei 225 rose 1.0 percent.

“Data have been pretty strong over the past few days, and that’s giving a boost to markets around the globe. Valuations are elevated, but you can justify them,” said David Joy, chief market strategist at Ameriprise Financial.

European stocks rose despite uncertainty after a referendum in Catalonia, Spain on its independence was marred by violent clashes between voters and police.

“Politics has clearly overshadowed the economic improvement in the eurozone, and this will likely remain the case for the rest of the week,” said Hussein Sayed, chief market strategist at FXTM.

Still, some believe that stocks in Europe still have room to push higher.

“Core Europe remains one of the preferred markets for us and one we believe offers attractive opportunities for investors over a multi-year time period,” Jeff Donlon, managing director of global strategies at investment management firm Manning & Napier.

Markets rise after positive economic data

Markets rose on Monday.

The S&P 500 rose 0.4 percent, the STOXX Europe 600 rose 0.4 percent and the Nikkei 225 rose 0.2 percent.

Positive economic data helped boost markets.

In the US, the ISM manufacturing index rose to 60.8 in September, the highest reading since May 2004.

“The economy is doing well despite the storms,” noted Bruce Bittles, chief investment strategist at Baird.

In the euro area, the IHS Markit final manufacturing purchasing managers' index rose to 58.1 in September from 57.4 in August.

“The euro zone manufacturing sector is in fine form, and likely continued to provide firm support for GDP growth in the third quarter,” said Claus Vistesen, chief euro zone economist at Pantheon Macroeconomics.

The Bank of Japan's Tankan survey on business confidence showed that its index for large manufacturers rose to plus 22 in September from plus 17 in June.

“Japanese growth, as we heard, is growing well above trend, so the growth story is not a bad one,” said Mitul Kotecha, head of Asia foreign-exchange and rates strategy at Barclays.

Bull market may have years left to run

Some analysts think that the current bull market has several more years left to run.

Brian Reynolds, asset class strategist at Canaccord Genuity, thinks that the stock market has been rallying because public pension funds keep flooding the credit markets with cash at a record pace and companies keep using that money to buy back their stock.

Reynolds wrote in a recent note that “it is more likely that the credit boom will intensify in the coming years, rather than come to a premature end”.

Jeff Saut, chief investment strategist at Raymond James, told CNBC that the bull market has “another six, seven, eight years left in it”.

In contrast, strategists at Bank of America Merrill Lynch said that investors should stay cautious.

“Best reason to be bearish in Q4 is there is no reason to be bearish,” BAML strategists wrote in the weekly note.

Markets rise amid increasing optimism

Markets mostly rose on Friday.

The S&P 500 rose 0.4 percent and the STOXX Europe 600 rose 0.5 percent but the Nikkei 225 was flat.

“The fundamental headlines in terms of market weakness don’t seem to be there right now, but valuations look a little stretched and investors may take a pause from the momentum we’ve been seeing,” said Sean Lynch, co-head of global equity strategy at Wells Fargo Investment Institute, of the US stock market.

“The overall recovery in the euro area is going from strength to strength at a time when people are increasingly optimistic about the global economy,” said Craig Erlam, senior market analyst at Oanda.

In Japan, investors are assessing the impact of the launch of new national party Kibo no To by Tokyo Governor Yuriko Koike.

“Investors may still be worried about some pledges of Kibo no To, such as freezing the scheduled consumption tax hike, but have learned that Prime Minister Shinzo Abe and Koike share many values as conservative politicians,” said Hideyuki Suzuki, head of the investment market research department at SBI Securities Co.

S&P 500 hits all-time high, maybe time for high quality stocks

Markets were mostly up on Thursday.

The S&P 500 rose 0.1 percent to an all-time high, the STOXX Europe 600 rose 0.2 percent and the Nikkei 225 rose 0.5 percent.

While talk of lower taxes and other changes to tax policy proposed by the Trump administration helped prop up stocks, IG Market Analyst Joshua Mahoney said that “there is a great deal of skepticism over the timing and ability to deliver such reforms”.

In the meantime, some investors are becoming concerned about the endurance of the stock market rally and shifting into high quality stocks.

“In an environment where everything is expensive, we recommend client portfolios designed to participate on the upside, but really focus on the downside,” said Wells Fargo's Head of Equity Strategy Chris Harvey. “We believe the best risk-reward is in higher quality stocks.”

Markets rise but may not have much upside left

Markets were mostly higher on Wednesday.

The S&P 500 and the STOXX Europe 600 rose 0.4 percent.

Most Asian markets also rose, with the Shanghai Composite edging up 0.1 percent, but the Nikkei 225 fell 0.3 percent ahead of dividend payments.

US stocks were boosted on Wednesday by the announcement of a plan to overhaul the US tax code but Wells Fargo Investment Institute's senior global equity strategist Scott Wren does not see much upside left.

“Valuations are meaningfully stretched in that the trailing 12 month P/E ration on the S&P 500 is 20 and change,” Wren said on CNBC. “The net net move between now and the end of 2018 is probably going to be pretty small.”

Markets mixed, Yellen sounds “cautiously hawkish” on monetary policy

Markets were mixed on Tuesday.

The S&P 500 and STOXX Europe 600 were flat

Earlier, Asian markets mostly fell amid lingering concerns over North Korea. The Nikkei 225 fell 0.3 percent.

“The markets are cautious but yet to fully price in a flare up in military conflict,” said Ivan Ip, a stock strategist at UOB Group.

In the US, markets showed little reaction to Federal Reserve chairwoman Janet Yellen's speech to the National Association for Business Economics.

Yellen said in her speech that because of the risk of the labour market overheating and financial instability, “it would be imprudent to keep monetary policy on hold until inflation is back to 2%”.

“The tone of her comments is cautiously hawkish,” said Ward McCarthy, chief financial economist at Jefferies & Co.

Indeed, market expectations for a rate increase in December based on prices in Fed funds futures moved up to 76 percent, according to CME Group’s FedWatch Tool.

Stocks fall, still reasons to stay bullish

The S&P 500 fell 0.2 percent on Monday amid tension over North Korea but Jeff Reaves sees seven reasons to stay bullish on the stock market:

1. Businesses see great earnings

2. Consumer metrics are strong

3. “Fear index” is far from scary

4. Growth-friendly agenda in D.C. (or gridlock)

5. Global resilience

6. Doomsday metrics can be (and often are) wrong

7. Stocks are still the best game in town.

S&P 500 to continue rising — or not

Analysts are divided on the outlook for the US stock market for the rest of 2017.

In an interview with MarketWatch last week, Laszlo Birinyi, president of Birinyi Associates, thinks that the US stock market has more room to run before 2017 is over.

Birinyi explained that “none of the things that concern us about the beginning of a bear market are currently in existence, like exuberance”.

At the same time, he said that there is still plenty of cash around, with “a lot of money looking to make money”.

In contrast, TIAA Investments' Brian Nick sees US stocks ending the year below current levels.

“We are going to see a leveling off in the trajectory of how fast these gains could come — especially given the fact that the price this year of the S&P 500 has grown faster than earnings have grown,” he said.

However, Nick remains optimistic for next year and thinks the S&P 500 will hit 2,600 by the end of 2018.

US stocks shrug off N Korea, in "bubble territory"

Markets were mixed on Friday.

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

Asian markets fell amid continued tension over North Korea but some analysts think that markets will be able to shrug it off as long as there is no military action from either side.

That is not to say that there is nothing for investors to worry about.

Howard Ma, chief investment officer at Meritocracy Capital Partners, thinks that the US stock market is at its fourth most expensive level ever.

"This puts the U.S. stock market smack-dab at the heart of bubble territory,” he said.

Markets mixed amid both optimism and warnings

Markets were mixed on Thursday.

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

Earlier in Asia, the Nikkei 225 rose 0.2 percent but the Shanghai Composite fell 0.2 percent.

“Valuations are getting a little stretched, and it seems like there is some complacency in the markets,” said Wade Balliet, chief investment strategist at Bank of the West.

Indeed, Jeremy Siegel sees more gains for stocks in the remaining days of the year.

“I would say corporate tax reform could add another 10 percent to the market even this year,” said Siegel.

In contrast, Robert Shiller is “warning against complacency” as he sees signs of a possible bear market.

“[T]he US stock market today looks a lot like it did at the peaks before most of the country's 13 previous bear markets,” he wrote.

Markets mixed as Fed announces start of asset unwind

Markets were mixed on Wednesday.

The S&P 500 edged up less than 0.1 percent while the STOXX Europe 600 was flat and Asian stocks were mixed.

The US 10-year Treasury yield rose to 2.27 percent after the Federal Reserve ended its monetary policy meeting by announcing that it would start to shrink its assets in October.

“The unwinding of the balance sheet will dominate markets for at least the next two years and cements our outlook for higher rates,” said Bryce Doty, senior portfolio manager at SIT Investments.

“Even though this is a slow and deliberate and thoughtful unwind plan, it is not without its potential to rattle markets,” said Kristina Hooper, global market strategist at Invesco.

The impending drawdown in Fed assets comes after a renewed surge of optimism among US investors, with the Wells Fargo/Gallup Investor and Retirement Optimism Index rising from +124 in the second quarter to +138 in the third quarter, its highest level since September 2000.

US stocks at new highs as investors await Fed meeting

Markets were mixed on Tuesday.

The S&P 500 edged up 0.1 percent to another record high while the STOXX Europe 600 was flat and Asian markets were mixed.

“With investors still re-evaluating the Federal Reserve’s ability to raise U.S. interest rates in December, attention will be directed towards Janet Yellen and her thoughts on the recent inflation trends in the U.S.,” said Lukman Otunuga, research analyst at FXTM, as the Fed kicked off a two-day monetary policy meeting on Tuesday.

In the meantime, Karyn Cavanaugh, senior market strategist at Voya Financial, said that markets “are paying attention to what they should be paying attention and that is earnings growth”.

Still, with US stocks at all-time highs, Bloomberg reported that “investors holding the priciest ones are starting to get uneasy”.

JC O’Hara, an analyst at FBN Securities Inc., wrote in a note to clients that “there are a few warning signs that have started to appear”.

S&P 500 hits another record high despite overvaluation

Markets rose on Monday.

The S&P 500 rose 0.2 percent, the STOXX Europe 600 rose 0.3 percent and the MSCI Asia Pacific ex-Japan index rose 1.1 percent.

While Monday's gain took the S&P 500 to another record high, Brad McMillan, chief investment officer at Commonwealth Financial Network, told CNBC that the stock market is way overvalued.

“The market probably would have to drop somewhere between 30 and 40 percent to get to fair value, based on historical standards,” said McMillan.

However, McMillan does not think a pull-back is imminent.

“Right now, a recession is a good ways away. And that's the engine for bear markets,” said McMillan.

On the other hand, CNBC noted that the S&P 500 has traded lower 70 percent of the time during the last two weeks of September since 1980, suffering an average loss of 1.3 percent.

S&P 500 at record high leaves valuations stretched

Markets rose last week, with the S&P 500 closing above 2,500 for the first time.

In a report highlighting some of the statistics behind the rally, Bloomberg noted that US stocks have not had a 5 percent correction in more than 400 days. In addition, the S&P 500’s 269 percent rally since the 2009 low is the third strongest ever.

However, in the process, US stocks have become expensive. Bloomberg noted that at 19 times forecast earnings, the S&P 500 is trading at the most expensive level since the dot-com era.

A quarterly review by the Bank for International Settlements published on Sunday noted the same.

“Equity market investors used record amounts of margin debt to lever up their investments, even though price/earnings ratios indicated that equity valuations might be stretched by historical standards,” the BIS reported.

The BIS added: “And there were some signs of search for yield in debt markets: issuance volumes in leveraged loan and high-yield bond markets rose while covenant standards eased.”

Markets shrug off N Korean missile launch, “can go a lot higher”

Markets were mixed on Friday.

The S&P 500 rose 0.2 percent and the Nikkei 225 rose 0.5 percent but the STOXX Europe 600 fell 0.3 percent.

Markets largely shrugged off North Korea's launch of a missile over Japan.

Terry Morris, senior vice president and senior equity manager for National Penn Investors Trust Company, said that investors ignored events in Korea after previous incidents did not produce lasting declines and have “learned to buy on the dips”.

“Valuations are stretched, but I don’t believe we’re in bubble territory. The market can go a lot higher,” added Morris.

European stocks fell after Bank of England dove Gertjan Vlieghe said that “we are approaching the moment when bank rate may need to rise”.

Markets mixed as China data disappoint

Markets were mixed on Thursday.

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

Elsewhere, the STOXX Europe 600 rose 0.1 percent but in Asia, the Nikkei 225 fell 0.3 percent and the Shanghai Composite fell 0.4 percent.

Disappointing economic data out of China held back stocks. Value-added industrial output slowed for a second straight month in August while growth in investments was the slowest in almost 18 years.

The data came even as some analysts see better prospects for Asian and emerging market stocks.

Analysts at Societe General said that Asian stocks have been beating global stocks and that the outperformance has only just begun.

Analysts at Bank of America Merrill Lynch said that emerging market stocks could double in two years and suggest that “a substantial overweight in Asia/EM equities is warranted”.

Markets mixed, US stocks gain despite “very high” valuations

Markets were mixed on Wednesday.

The S&P 500 rose less than 0.1 percent but still closed at another record high.

The STOXX Europe 600 was flat as gains in Germany and France were offset by falls in the UK.

Asian markets were mixed. The Nikkei 225 rose 0.5 percent but most of the other Asian markets fell.

“The U.S. stock market is exhibiting positive short- and long-term momentum, and breadth has expanded enough to lift the S&P 500 to a new all-time high,” said Katie Stockton, chief technical strategist at BTIG Research.

However, Maris Ogg, president at Tower Bridge Advisors, said that markets “are fully valued now, so earnings will need to catch up to prices”.

Indeed, Julian Robertson Jr, founder of Tiger Management, said at the Delivering Alpha conference presented by CNBC and Institutional Investor that stock market valuations are “very high” and that low interest rates “are creating a bubble”.

And another investor at the conference said that the high yield debt market is even more overvalued. Saba Capital's Boaz Weinstein said that for high yield debt, “the reward isn't there” given the risk.

US stocks hit record highs, could rise further on momentum

Markets rose on Tuesday.

In the US, the S&P 500, Dow Jones Industrial Average and Nasdaq Composite all rose 0.3 percent to hit record highs.

Elsewhere, the STOXX Europe 600 rose 0.5 percent and the Nikkei 225 jumped 1.2 percent.

Many analysts expect further upside for stocks.

“Buying begets more buying,” said Quincy Krosby, Prudential Financial chief market strategist.

“Unless we get some different headlines, the path of least resistance is higher,” said Scott Redler, partner with T3Live.com.

However, Paul LaRosa, chief market technician at Maxim Group, said: “Unless I see a big improvement in the breadth of the market, I'm not expecting a broad-based rally to develop.”

Markets rose on Monday as risk appetite returned after Hurricane Irma wreaked less damage in the US than forecast and North Korea refrained from aggravating tensions.

The MSCI All-Country World Index rose 0.8 percent. The S&P 500 rose 1.1 percent to a record high, the STOXX Europe 600 rose 1 percent and the MSCI Emerging Market Index rose 0.7 percent.

Oil rose, with West Texas Intermediate crude rising 1.2 percent.

Bonds fell. The US 10-year Treasury yield rose eight basis points to 2.13 percent, the German 10-year yield rose two basis points to 0.33 percent and the UK 10-year yield rose five basis points to 1.04 percent.

Gold fell 1.1 percent.

Investors worry about Irma and bubbles

While many investors are focused on Hurricane Irma and its potential impact on the stock market, others are concerned about bubbles in asset markets.

From Bloomberg:

From Alan Greenspan and the current Federal Reserve staff to fund managers hoarding cash, people feel queasy about asset prices.

Euro high-yield debt is trading in line with U.S. Treasuries for the first time ever. Tajikistan is selling Eurobonds as yields on the junkiest emerging markets drop below 6 percent. An exchange-traded fund for betting on low volatility has more than doubled in size this year. And let’s not get started on the bitcoin rally.

Asset prices are getting “more bubbly” than in past periods of effervescence, analysts at Bank of America Merrill Lynch warn...

Markets mixed as funds pour into bonds and non-US stocks

Markets were mixed on Friday.

The S&P 500 fell 0.2 percent and the Nikkei 225 fell 0.6 percent. However, the STOXX Europe 600 rose 0.2 percent.

Investors were cautious ahead of a possible missile test by North Korea and Hurricane Irma’s arrival on the Florida coast over the weekend.

However, investors had been showing caution throughout the week. Weekly flows into global mutual funds showed that investors have been putting funds into bonds and gold, according to Bank of America Merrill Lynch research.

For stocks, investors have moved funds to non-US equities, with the past week marking the 11th out of the past 12 weeks of net outflows for US equities.

Markets mixed, bank stocks fall

Markets were mixed on Thursday.

The S&P 500 was flat, the STOXX Europe 600 rose 0.3 percent and the Nikkei 225 rose 0.2 percent.

Bank stocks fell in the US and Europe after the ECB left interest rates unchanged on Thursday but Barclays thinks that the time is right to pick up European bank shares.

In a research note published on Wednesday, Barclays wrote that European stocks have the potential to push higher through the end of 2017, and with the euro rising, banks, transports and materials are likely winners while staples and health care are the likely losers.

Markets mixed but stock rally may have “years to run”

Markets were mixed on Wednesday.

The S&P 500 rose 0.3 percent and the STOXX Europe 600 rose 0.1 percent. However, the Nikkei 225 slipped 0.1 percent.

“The same old political uncertainties surrounding North Korea haven’t gone away, but for now traders are becoming immune to all the bluster,” said David Madden, market analyst at CMC Markets, in a note.

Indeed, Carol Pepper, chief executive officer at Pepper International, thinks that stocks have plenty of room to rise.

“I think we are mid-way through the game,” said Pepper. “You could say we have 5, 6 years to run.”

Markets fall but risk-off sentiment remains “at the margin”

Markets fell on Tuesday.

The S&P 500 fell 0.8 percent, the STOXX Europe 600 fell 0.1 percent and the Nikkei 225 fell 0.6 percent.

Ian Winer, head of the equities division at Wedbush Securities, said: “People are getting a little more nervous on the margin—not just the geopolitical stuff—over whether tax reforms and pro-business policies will get done.”

However, National Australia Bank Director of Economics David de Garis noted that risk off sentiment has not become obvious as moves back to safe haven or risk-off currencies “have been very much at the margin”.

Indeed, Oppenheimer analysts now see the “next leg” of the stock market rally ahead and expects “new highs” for the S&P 500 over the coming weeks.

Markets falls after North Korean nuclear test

Markets fell on Monday.

The STOXX Europe 600 fell 0.5 percent and the Nikkei 225 fell 0.9 percent.

The US stock market was closed for a holiday.

Markets fell after North Korea conducted a nuclear test on Sunday.

“While this is the sixth nuclear test, it is the first since Trump took office, so the market will see this as a clear escalation of tensions,” said Chris Weston, chief market strategist at IG Group.

“Unfortunately, there is unlikely to be any end in sight for this current standoff with North Korea, with few options seemingly on the table to demilitarize the regime,” said IG market analyst Josh Mahony in a note.

Are US Treasuries headed higher?

Some traders think that US Treasuries are likely to rise, pushing yields down.

Chad Morganlander, portfolio manager at Washington Crossing Advisors, told CNBC that the 10-year yield could fall below 2 percent over the next four to six months.

He said that economic growth in the US and globally will begin to “modestly decelerate”, which would lead to a depression in yields.

Meanwhile, Todd Gordon, founder of TradingAnalysis.com, told CNBC that there is potential to gain from more upside in a Treasury bond-tracking exchange-traded fund.

He said that while bonds and stocks usually move inversely, the iShares 20+ Year Treasury Bond TLT ETF has been rallying in tandem with the S&P 500-tracking SPY ETF.

“That's telling me that bonds are either moving higher because of coming risk aversion or the Fed is really just behind this market and not going to take their foot off the gas pedal,” he said.

Markets rise as US employment rises less than expected

Markets rose on Friday.

The S&p 500 rose 0.2 percent, the STOXX Europe 600 rose 0.6 percent and the Nikkei 225 rose 0.2 percent.

A report on Friday showed that the US economy added 156,000 jobs in August, less than the 170,000-180,000 expected by economists.

“This report just kind of pushed back every expectation about a rate hike,” said Mike Antonelli, equity sales trader at Robert W. Baird & Co.

Indeed, a CNBC report noted that in the past, when the employment report fell short of expectations by between 20,000 to 30,000 jobs, the Nasdaq tended to lead other indexes higher, gaining an average of almost 1.7 percent for the next month and trading positively 67 percent of the time.

Markets rise on economic momentum

Markets rose on Thursday.

The S&P 500 rose 0.6 percent, the STOXX Europe 600 rose 0.8 percent and the Nikkei 225 rose 0.7 percent.

Cristina Ulang, head of research at First Metro Investment Corp, said that US and China data “support the outlook that the global recovery is gaining ground and the growth is on a strengthening trajectory that will be good for corporate earnings and exporters to these two markets”.

“In an environment where the economy and earnings continue to grow, markets will also climb. Geopolitics shake up markets from time to time, but usually do not have long-lasting impact,” said Arian Vojdani, investment strategist at MV Financial.

Indeed, Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC on Thursday that for investors, “really good economic momentum” in the US and around the globe means that “the trend is still up”.