Not two weeks ago market historians had us bracing for impact and on guard for a disastrous September. So far nothing could be further from the truth. Stocks continue to erase August's losses and what seemed ominous and scary a few days ago isn't quite as fearsome anymore.
"I think it can continue," says Keith McCullough, CEO of Hedgeye Risk Management in the attached video, "and I think the reasons are about as straight forward as they've ever been."
Not only have all the theories of what he calls the "end of the world" community not come to fruition, but three other forces are also driving markets right now: a strong dollar, rising interest rates, and the fact that "growth stocks are just flying" in the face of slow (economic) growth.
"I don't think you should be long debt. I think you should be long growth," he says, "and the best place to find that is in the smaller cap equities."
Fundamentally, he's looking for GDP to continue its recent ascent (from 0.4% to 2.5%) and perhaps hit 3% within the next three to six months.
"I think that has people completely squirreled," McCullough says. "People cannot accept the reality that the world isn't ending," he argues, adding that we're not going to go back and re-fight the wars of the last five years.
He may be right and September may buck its historic trend as the worst month of the year for stocks. Then again, with at least one war set to be re-faught over the debt ceiling and another war (with Syria) not completely off the table, the next two weeks could prove to be a lot more challenging than past two.
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