Dear friends,

When was the last time you received a solar-powered tulip? You neither, huh? Chances are, time travelers back to 1637 could make a huge splash with what Dutch lawmakers ‘gifted’ European Central Bank president Mario Draghi last week. 

Such was the subtle reminder delivered that bubble blowers do make their way into history books, but not in ‘alta moda,’ or high fashion, to borrow from Draghi’s native Italian.  

It’s hard to believe, but it’s been over a year since Germany’s top banking regulator warned that negative interest rates were a “seeping poison” infecting Germany’s financial system. Such was the pressure exerted on German life insurers, “a handful” had been put on death watch, as in they might be forced to wind down by 2018 (they call that ‘next year’ in today’s parlance) if rates did not rise.  

Thank heavens the world’s central bankers have seen the light? Well no, but nor have their worst intrusions come back to haunt them. We’d all like to end that sentence with “yet.” But can we? 

What if today is not a repeat of late 1998? What if regulatory relief is a realistically deliverable benefit to small and big companies alike starved for just that for the better part of the last decade? What if the GOP does wake up tomorrow and smells their own blood in the water and moves to enact the very tax reforms markets have priced in before the midterm elections come and go? 

Reason-driven investors can clearly see that stock valuations are stretched taut thin. This same group of skeptics has also noted that the economic data have decidedly divorced themselves from any semblance of trading levels. Tack on complacency and sky-high uncertainty on just about every political and geopolitical front and the formula seems to be intact to sell the hell out of this market. 

The temptation is clearly there to believe that down days will snowball into an avalanche of losses. But gravity knows no bounds when markets want to rise. The bears can gnash their teeth all they like, but a strong mouth guard might be called for in the near term. It’s more than likely than not this bull market still has room to run. 

For more on the markets defying gravity and the bad behavior they elicit of bile-filled bulls, please enjoy today’s installment, The Running of the Bulls’ Mouths

Until we meet again, wishing you well,