Alpha Trader's 11th episode features hosts Aaron Task and Stephen Alpher riffing on the year just passed, and mulling what might be to come in 2020.
Before getting into 2019, Task reminds just how poor 2018 was - with negative returns across pretty much every asset class of note. That red ink came alongside what turned out to be the end of a multi-year Fed tightening cycle. 2019 brought with it Fed easing, and the market responded by moving sharply higher. The "soft landing" having been achieved, the Fed appears happy (for now) to sit on the sidelines in 2020.
The current period reminds Alpher of the mid-90s, when markets had a bit of a rough go it in 93-94 while Alan Greenspan and company were hiking rates, but bounced in 1995 when the Fed eased a bit. The soft landing set the stage for several more years of a bull run. Staying in the mid-90s, Task digs out The Maestro's famous "irrational exuberance" quip, and says there's nothing approximating that right now. He notes a recent poll in which most respondents said the market was down this year (S&P 500 is up 27% at the moment)!
Being bullish for 2020 doesn't mean it's straight up from here, and the hosts remind the late-90s bull move had sizable hiccups in 1996, 1997, and 1998. They remark that there hasn't been a bear in a long run of Alpha Trader guests - from Eddy Elfenbein to J.C. Parets to Ryan Detrick to Jim O'Shaughnessy to Mark Dow to Jon Najarian.
Task also comes back to the Fed's repo operations which is injecting 10s of billions of dollars into the reserve system each month. He wonders if there's a parallel with the Fed's 1999 liquidity injections to stave off Y2K fears. The Y2K worry proved to be unfounded, and the Fed's goosing did little but help create the final blow-off top of the 90s bull market.
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