Just about every Bear has brought down their flag and conceded the worst is over, that economic conditions, while still lousy overall, will probably prove the rally in stocks is valid. Repeated surges to new recovery highs has left no other apparent explanation for the weary.
Macro views of market activity are usually traveling at about half the speed of professional trade ideas, but even for larger managers, the turning of big positions, promotes directional plays, as it makes life so much easier. The hedge industry is obviously attached to the bull side because it is easier to invest trade than it is to trade trade. Their recent performance recovery this year is evidence again there are few great thinkers running the biggest of funds. Making money on the up and getting hammered on the down says it all.
The zero rate interest rate policy of the Fed has helped stocks to rally simply as a function of providing one of the few liquid investment opportunities. The lack of sellers after such a large liquidation cycle of 2008 and early 2009, has amplified price moves hinged on investment strategies chasing lower prices. Extrapolating a recovery trend and possibly much more is what the herd will always follow and has historically been the story for stocks. But zero rates may create a dilemma in the way things used to work as current successful Treasury auctions continue to show a world of risk aversion. A policy of simply saving the higher orders of banking/investment firms does not insure economic growth. Injecting cash and cutting overhead does work but with obvious limitations.
This rally is a trade first with the complications associated with rapid deceleration when it ends. The ensuing scramble with banners declaring the second round of the world is ending will be as shallow as the current victory celebrations.
