Goldilocks Vs. The Bears: Is She In The Room Or Out Of The Room?

Let’s investigate belief in Goldilocks vs belief in Bears.

John Rubino at DollarCollapse says A Bull Market For The History Books — Bear Market To Follow Shortly.

Why the current expansion/bull market has so long is open to debate. What’s undeniable, though, is the vast amount of malinvestment that has accumulated. The biggest example might be corporations borrowing hundreds of billions of dollars to buy back their stock at record high prices. See Record Buybacks at Worst Possible Time. If those equities subsequently fall by half in a future bear market, today’s buybacks will end up as an object lesson in corporate hubris.

Goldilocks Jobs Report

Liz Ann Sonders says All Right Now: Goldilocks Jobs Report Eases Inflation Fears.

Key Points

A very strong jobs growth with benign wage pressures unleashed a strong day for the stock market.

Other than wage growth deceleration, the details of the report were quite healthy.

Tax reform can take some of the credit for stronger goods employment relative to services employment.
In the wake of the release of January’s jobs report—which saw a jump in average hourly earnings—I had our fearless cartoonist Charlos Gary create the visual below, with the headline “Goldilocks may be leaving the building.” Notice that the little bond bear has been awakened (as Schwab’s Kathy Jones has been detailing); but the equity bears are still tucked in their beds—albeit with the non-recession bear keeping a cautious eye on the situation.
Courtesy of last week’s February jobs report though, it looks like Goldilocks may have taken a step back into the building. For those not familiar with the analogy, an economy that’s operating “not too hot, but not too cold” is often referred to as a Goldilocks environment. We have been in such an environment as it relates to economic growth and wages/inflation for much of the current economic expansion.