2) China:inflationisn't an issue, but growth is. Can they keep it going? A lot less talk about tightening monetary policy, more talk about helping people get loans and stabilizing real estate. GDP at 9.3 percent last quarter, a bit lighter than previous quarters but still strong.
I'd say the jury was still out on this one.
3) U.S.: economic data choppy, recession unlikely, but corporate guidance looks weaker than normal. I want to see more corporate guidance, but it's now likely we will see low-growth with little job pickup.
What's this all mean? At 1100 on the S&P 500, a buy, but at 1250...caution. Stocks are arguably fairly priced to slightly overpriced in this environment.
There's one other player that traders keep pointing out to me, a "fourth factor": the greed trade.
Traders have had a miserable second half, many are underperforming. Many were too short when they should have been long, and vice versa. They are desperate to make their numbers. This drives higher risk taking. It could be a major reason the market is holding up so well.
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