Emanuel said the signs of progress on the trade talks has been helping risk assets. “There’s going to be a deal. There’s going to be a promise of further talks. It’s going to keep going. It’s going to stabilize things as well. You’re seeing it in the Chinese equity market. You’re seeing it in the Chinese currency market,” he said. “The psychological damage in the fourth quarter was significant enough that people couldn’t get their head around getting reinvested this early in the year but the Fed is greenlighting that stand, as is Chinese stimulus and the prospects of a trade deal.”
He said all of the markets are moving on the prospect of a deal except for the fixed income market. Yields, which move opposite rice, have been lower, a sign of concern about the economy and a response to the Fed’s low rates. Treasury yields could also be moving lower with European bonds.
“They’re not discounting it in the fixed income market and we’re keeping an eye on that,” he said.
Stovall said the bull market’s run, even if you just took it to its last high in September, is way longer than any other bull market. “As of today, this bull market is 3,641 calendar days long,” he said Tuesday. “The next longest was the one that ended in 2000 after 3,452 days.”
Emanuel said the older bull market is inherently more risky, and investors remain underinvested after selling out positions at the end of last year.
“If you look at the fourth quarter of 2018, it was mass liquidation. You basically sold everything You covered shorts and got positions down to almost nothing. You’ve seen the number of people that are neutral on the market rise over the course of this year so far. It tells you they’re underinvested. They’re skeptical,” he said. That could be a positive for the market.