Peter Eliades Warns the Stock Market May be Peaking
In a debate on CNBC with regular contributor Michael Farr, newsletter writer Peter Eliades argued that the stock market could be approaching its peak. The cautiously optimistic Farr said, “you don’t fight the tape and you don’t fight the Fed.” Farr added that “this isn’t the year to sell in May and go away.”
Eliades said the type of momentum we’ve seen doesn’t go away in a day or two, or even a week or two. However, Eliades said the yield on the S&P 500 is now 2.17% and if you look over 150 years at what happens when the yield is below 2%, the greatest gain over the next 10 years is 3-4%.
Eliades said he wouldn’t be surprised if the lows in 2009 were challenged. A lot of the rally has been generated by quantitative easing, he added.
Farr took issue with Eliade’s forecast pointing out the fundamental underpinnings of the market have improved (higher book values, corporate cash holdings, greater earnings, etc.). Farr admitted he was worried about there being 500 trading days without a 10% correction.
Back in May 2009, Eliades believed the Dow could collapse as low as 4,000 [link].