It may be early, but so far this century doesn’t have much to recommend it. Economic and financial crises, terrorism and wars without winners or even ends, and vulgarity becoming banal in popular culture; these all describe the past 15 years or so.
Until now. For the first time in the 21st century, the New York Mets are headed to baseball’s World Series.
They last made it to the Fall Classic in 2000, when the Amazins succumbed to their other-borough rivals, the Yankees, in Gotham’s long-ago, seemingly carefree days before 9/11. (That was the final year of the 20th century, notwithstanding the erroneous assertion that it marked the start of the new millennium.)
After nearly a decade and a half of performances ranging from underachieving mediocrity to epic collapse, the Mets had a massive reversal of fortune in the final two months of this year’s regular season. Then they gutted their way through the first two rounds of postseason play, including a sweep of the Chicago Cubs, the sentimental favorites who haven’t won a World Series since Teddy Roosevelt was in the White House. And now the Mets are headed to the Fall Classic.
And while the team’s ownership has denied it, it’s difficult to believe that the Amazins’ long years of frustration didn’t have something to do with the losses the Wilpons suffered for having trusted their fortune to Bernie Madoff, their erstwhile friend and neighbor. But just before the July 31 trade deadline, the Mets opened their wallets to get the talent that put the team over the top.
Also returning to its 2000 form was Microsoft (ticker: MSFT), which Friday surged 10%, back to its highest stock price since that year, on the heels of its strong September quarter results. Also soaring as if it were the turn of the century was (AMZN), which actually reported a profit. And Alphabet GOOGL  (GOOGL)—the company formerly known as Google, which wasn’t a public company at the time of Y2K, when Prince was known by some weird glyph—also took flight.
According to the redoubtable Howard Silverblatt of Standard & Poor’s, those three tech giants accounted for about half of Friday’s rise in the Standard & Poor’s 500, which ended up 1.1% for the session and 2.1% for the week. With that gain, the large-cap stock benchmark got back into positive ground for 2015 and was up for the fourth straight week, and during that span it climbed some 7.5%.
Much as we Mets fans would like to attribute the stock market’s advance to the Amazins’ resurgence, truth to tell, there’s something more afoot. Democratic partisans would credit the vastly improved presidential prospects of Hillary Clinton after Vice President Joe Biden declined to toss his hat in the ring for 2016 and the former secretary of state survived her congressional inquisition over Benghazi.
That seems a bit of a stretch, however. Hillary was the favorite, even while the Veep was doing his Hamlet impression, as longtime Washington insider Greg Valliere, who now provides his expert insights to clients of Horizon Investments, said at Barron’s Art of Successful Investing conference last Monday. (For more on the gathering, see the feature story.)
Greg added that he thought a strong Hillary candidacy would invigorate the Republican core support for congressional candidates in this year’s races. As for Donald Trump, Greg sees him as emblematic of the “primal-scream” phase of the GOP campaign and, by process of elimination, predicted that Florida Sen. Marco Rubio would be the Republican presidential candidate. The Donald appears to be fading, at least in one Iowa poll, which puts him behind Dr. Ben Carson, although this week’s third GOP debate could change the standings.
In the GOP race, one is tempted to think the real leader is “none of the above,” as this primal-scream phase plays out. And none of the above explains the stock market’s surge.
Central banks once again get the credit for the sharp advance at the end of last week. European Central Bank head Mario Draghi Thursday strongly suggested that further accommodative measures—in addition to the ECB’s current quantitative easing and negative interest rates—would be forthcoming in December. Then, on Friday, the People’s Bank of China announced its sixth round of interest-rate cuts since last November, along with further reductions in bank-reserve requirements.
In other words, it was the same story of central banks’ largess flowing to the equity markets.

Moreover, the Bank of Japan this week may expand its asset purchases, which include exchange-traded funds, in addition to the mundane government bonds that have been central banks’ traditional asset.
Among the exclusive club of central bankers, Federal Reserve Chair Janet Yellen would appear to be the odd woman out. The majority of economists continue to predict that, by December, the U.S. central bank will begin raising short-term rates from the near-zero floor where they’ve been stuck since late 2008.
For its part, however, the federal-funds futures market says the odds are about 2-to-1 against the liftoff in rates commencing in December (a 36% probability, according to Bloomberg calculations). As for this week’s meeting of the Federal Open Market Committee, the probability of a rate hike is a mere 6%. The fed-funds futures market reckons that the first increase will come in March, with a 60.6% probability.
What’s clear to the equity markets is that the central-bank tide has turned decisively toward more easing.
And so yet again, the timing for the first Fed boost is being pushed further into the future. And other central banks are dealing with weakening growth.
In China, there is further monetary ease, even though official third-quarter numbers show the economy grew 6.9% from its level a year ago. The divergence of government data from reality has increased, according to Barclays’ estimates, with the bank calculating that actual growth is one to 1.7 percentage points below the official numbers. President Xi will announce a new five-year plan this week. The emphasis will be on continued reforms, but growth will remain a focus.
How the Fed can swim against the global current of increased monetary accommodation is a puzzlement.
With interest rates near zero almost everywhere, the effects of monetary policy are seen most clearly in the foreign-exchange market. Expectations of ECB easing sent the euro down sharply against the greenback, from above $1.13 at midweek to around $1.10 at week’s end.
Currency effects have been a major depressant for third-quarter earnings now rolling in; no surprise to the stock market, which has largely been willing to look past them. While the U.S. economy is less export-dependent than others, the strong dollar restrains prices of goods. Preventing these prices from falling leads to central-bank accommodation and, in turn, higher asset prices.
In some cases, those rises only mark a return to 2000. Mets fans hope to go back further, to 1986 or 1969, when the Amazins won the World Series.

IT’S A STRANGE SORT of bull market that features big blowups in stocks. First came the plunge in Glencore GLCNF), the giant commodities dealer and miner. And now at center stage is Valeant Pharmaceuticals International (VRX), the controversial drug conglomerate. Its stock was in free-fall much of the week over a short-seller’s allegations of accounting improprieties that implied similarities with Enron, another big disaster of the 21st century.
The company will hold a conference call early Monday, in which it will attempt to answer those charges. Fellow Mets fan Vito J. Racanelli has long voiced skepticism about the drug outfit. He discusses the latest chapter in the Valeant melodrama in The Trader. His wariness deserves a Daniel Murphy–style curtain call.
What has seemed the bigger issue than any alleged accounting irregularities is the extent to which an aggressive player such as Valeant has been staked by the credit markets—and whether the debt markets will continue to fund its expansion strategy.
The price action in Valeant bonds is waving a big caution flag. While not as steep as the stock’s, the losses in the bonds are striking, given that fixed-income securities typically don’t suffer such big swings except in distressed situations.
To take one particular issue, Valeant’s 5.5% bonds due in 2023 traded at 85.25 cents on the dollar Thursday, for a yield of 8.8%—high, considering its relatively short maturity, according to the Trace reporting system of Finra. By Friday, the bonds had traded up to 87, still a far cry from the price of 101 where they were perched in late September, before the accounting controversy started.
KDP Investment Advisors wrote last week that it doubts Valeant is using an affiliated pharmacy, Philidor, to “stuff the channel” with product, as alleged by some shorts. But, KDP added, the lack of disclosure about Philidor calls into question Valeant’s “management integrity/competence.”
On the same theme, Gimme Credit adds, “We also doubt this will be the last of bad news for Valeant.”
To be sure, the stock is already down 56% from its 52-week high touched in early August. And the media coverage is all about how many millions have been lost by Valeant’s hedge fund fans in the process. That’s what these speculators do; they often lose as big as they win.
Bond investors are different. They expect to get paid back, and get paid for the risk that might not happen.
The price action in Valeant bonds says that the credit markets will be less willing to bank the company’s future growth, even if they give it the benefit of the doubt about any alleged accounting legerdemain.