“Did you hear the news that was driving the markets to new records this morning?

No? Yeah, me either. But such is the nature of a speculative driven frenzy.”

Since the markets were closed yesterday, there is nothing to update from this past weekend's newsletter.

While that missive was primarily directed at why “bond bears will likely be wrong again,” I did state the following about the market:

“That extension, combined with extreme overbought conditions on multiple levels, has historically not been met with the most optimistic of outcomes.

Importantly, such extensions have NEVER been resolved by a market that moved sideways. But, ‘exuberance' of this type is not uncommon during a market ‘melt-up' phase.

Nothing changed this past week as the “melt-up” phase gains momentum. We are on track currently to ratchet the both the fastest and most numerous sequential milestone advances for the Dow in history.

You can barely print ‘Dow 2X,000' hats fast enough.”

The surge in market exuberance in terms of both individual and professional investors is generally indicative of the “capitulation phase” of an advance which is when the last of the “holdouts” finally jump back into a market which “can seemingly never go down.”

From “QE” to “Low Rates Justify High Valuations” to “Tax Cuts,” the unfettered rise in asset prices has been underpinned by a shifting narrative backing bullish sentiment.

The latest, of course, is that “tax cuts” will boost bottom line earnings giving investors a reason to bid asset prices up further.