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WSJ Stunned By "Lack Of Market Dips To Buy"

Having previously reflected on how "easy" this market has been in 2017, it appears The WSJ has finally noticed something is different this time, pointing out that major indexes haven’t gone a calendar year without a pullback of at least 5% in at least 30 years.

We noted previously that there hasn’t been a single instance when the U.S. equity benchmark pulled back 5 percent from its highs in 2017. The last time the market slumped at least that much was in the aftermath of the June 2016 Brexit vote -- marking a 267-day streak that’s the longest since 1996, according to data compiled by Bloomberg. The last time equity markets went this deep into a year without all three of those benchmark indexes suffering at least 5% pullbacks was nearly a quarter-century ago, in 1993.

Furthermore, we pointed out that this year's 2.8% drawdown (for now), continues a 6 year streak of drawdowns that are dramatically below the longer-term average of 14.1% drops intra-year.

The Journal notes that, if it finishes 2017 that way, it would be the second-smallest decline in a calendar year over the past 60 years, according to LPL Financial, an independent brokerage and investment firm. The smallest was in 1995, when the index suffered a 2.5% fall. It surged 34% that year. 

But it's not just US markets that are basking in the glow of central-bank support. The MSCI Asia-Pacific ex-Japan index, a benchmark that tracks big Asian companies listed globally, has surged 22% in 2017, propelled by strong rallies in tech giants such as Tencent Holdings Ltd. and Alibaba Group Holding Ltd.

The index’s biggest peak-to-trough decline during the year was 2%.

 

If that performance continues for the rest of the year, it would be the smallest intra-year drop over at least the past three decades and a far cry from the index’s average 20% pullback each year, according to analysts at J.P. Morgan Asset Management. Indeed, there have been only three instances over the past 30 years in which the Asia index’s biggest intra-year drop was less than 10%: 1991, 1993 and 2005.

Europe’s performance, measured by the MSCI Europe Index, has also been steady.

The index’s biggest drop this year was 4%, far below its average intra-year decline of 16%, according to J.P. Morgan Asset Management.

History suggests the stretch of calm won’t last. The S&P 500 has avoided a 5% or more pullback in just five of the past 60 years, according to LPL.

“The reality is central banks continue to be accommodative and the global earnings picture keeps on improving,” says Ryan Detrick, senior market strategist at LPL Financial.

 

“Those two things can make up for a lot of other sins.”

And while The Journal seems surprised by the lack of dips, we are not, as we noted previously, correlation between surging global stocks and never-ending increases in G3 central bank balance sheets, has never been higher...