3 reasons to be short-term bullish on equity markets

1. The Bank of Japan (BOJ) is becoming the whale of the Nikkei hoovering up local stocks. The BOJ has recently bought 2% of the Nikkei's market Cap. And will be the largest shareholder in 51 companies by the end of 2017.

2. Earnings revisions drive markets, and the market is so conservative / negative that "surprises" are occurring more often to aid the Bulls. An okay report is being taken positively. We will look at the 3 local stocks that soared ~10% yesterday later in this report.

3. European equities are the cheapest in history versus interest rates. There is a saying in the market that has proven very accurate since the GFC - "don't fight the Fed" but we think it should say "don't fight the coordinated central banks"...not as catchy but arguably more powerful.

While central banks want to create a happy wealth effect by increasing asset prices, it remains a tough game to fight their weight of money. Our view is this asset inflation will provide some excellent selling opportunities going forward.

Investors are in a tough position chasing high quality stocks inexpensive territory, but history shows us that distorted valuations can persist over sustained periods of time.

US S&P500 Monthly Chart

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