About a year ago, in A Bull Market Is Born, we argued that a bull market in bonds had begun. Treasuries went on to rise for months, with the broad UST index fund GOVT hitting a peak of $26.69 on August 28. Treasuries are now in a bear market.
Gold, the other bull market we called, on the other hand remains in bull market mode. Stocks bottomed on December 24, 2019, and have been in a bull market since.
But this being not only the end of a year, but of a decade, let’s get out our macroscopes and take a bigger picture view of the market outlook for the 2020s. Over the past decade, US stocks have stormed higher, while non-US stocks have languished. Bonds roared as physical commodities treaded water. Next decade? I’ll say all that turns on its head. Commodity prices soar. Foreign stocks, left in the dust for most of the 2010s, outperform US stocks. Value outperforms growth. The inflation that the Federal Reserve has been agitating for – and which has been building but not yet becoming as obvious in conventional metrics like the CPI – will finally start to show up even in such lagging measures.
We’ll put a finer point on the nearer term when the year end Synthetic Systems update is due. Watch for it in the Market Analysis section. Meanwhile, Merry Christmas and Happy New Year!