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US equities fiddle while the rest of the developed world burns

Today the S&P500 hit 2,000 for the first time, shrugging off the recent mid-summer doldrums.  Stocks have recovered nicely from the brief two week reprieve of about 4%.  Now they’re roaring to new highs, albeit in lower than average trading volume (the same phenomenon we’ve seen all year).

Not so much for the rest of the developed world.  Europe is struggling with recession and deflation while Japan’s Abenomics flounder.  As the US hits record highs, other market are off decidedly from their highs- Germany & Japan off 10%, Italy down more than 13%, Spain off 9%, and Switzerland down a paltry 5.5%.

How long can the US market defy reality?  The old adage is that “markets can remain irrational longer than you can remain solvent“.

Time will tell.  I personally remain cautious.  My positions in the US Dollar are finally showing a small gain.  Oddly enough, the Dollar is near a 12 month high, while 10 year Treasury yields are near a low.  We live in interesting times.