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Another 10 reasons from David Rosenberg on why the equity rally is finished.
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Monday, December 7, 2009, 5:29 PM ETAnother 10 reasons from David Rosenberg on why the equity rally is finished.
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been wrong a lot and yet he gets a lot of air time....
One thing we know from Mr Rosenberg, when he finally turns bullish the last bear will have capitulated.
Even a broken clock is right twice a day...
- Chauncey Gardener
WHERE DO THEY FIND THESE PEOPLE? AND HE GETS PAID FOR THIS? OMG!
1. For the time being, the equity market is going to have to contend with more chatter of the Fed’s exit strategy. THIS ONE IS JUST STUPID. WE KNOW THAT RATES HAVE TO GO UP. IF AND WHEN THEY DO IT WILL BE IN RESPONSE TO STRONG GROWTH. A GOOD PROBLEM TO HAVE.
2. The market also faces a new reality. While employment stabilizing (maybe) is a good thing, it means the era of declining unit labour costs and margin expansion is behind us. ALSO STUPID.FOR INDIVIDUAL FIRMS THE OPERATING LEVERAGE CREATED HAS BEEN FANTASTIC AND WILL UNDERPIN PROFIT GROWTH. FOR THE ECONOMY AS A WHOLE INCREASED EMPLOYMENT WILL DRIVE AGGREGATE DEMAND. IT WILL BE INTERESTING TO SEE IF COSTS ARE STICKY ON THE WAY UP. I SUSPECT THEY WILL BE.
3. Market leadership is beginning to fade as seen by the receding advance-decline line on the big board.PURE SPECULATIONA AND A MATTER OF OPNION. GO ASK A CAB DRIVER. HIS VIEW WILL BE JUST AS VALID.
4. Market complacency is a worry with the VIX index back down to 21.25. The good news is that insurance against a correction is priced about as low as it can go. Protection is cheap. NORMALCY IS A BAD THING?
5. The WSJ (page C1) reports that not only have individual investors been selling into this last leg of the rally (then again, the S&P 500 has really done nothing for over six weeks), but pension funds have been rebalancing too. ALWAYS LIKE TO BET AGAINST INDIVIDUALS
6. Volume has declined markedly and has surpassed 4.7 billion shares on the NYSE just once in the past three weeks. SO WHAT. BFD
7. With the correlation between a weak greenback and a positive stock market above 90% over the past eight months (versus zero over the past 30 years), a countertrend rally in the U.S. dollar would likely coincide with sputtering equity prices. MAYBE. OR IT COULD LEAD TO THE OPPOSITE.
8. The Dow transports/utilities ratio has turned in a classic triple-top and this is a signpost to get defensive. LET ME CHECK THE ENTRAIS OF THE CHICKEN I USE TO PREDICT THE MARKET
9. The latest Investors Intelligence poll shows the bull camp at 50%; the bear share at a mere 16.7%. In other words, there are three bulls for every bear. This is negative from a contrary perspective (another sign of complacency). RUNS CONTRA TO POINT 5. WHICH IS IT?
10. Corporate bond yields have stopped narrowing over the past three months and have actually recently shown modest signs of an upward bias. VERY VERY MODEST. HIGH QUALITY IS NOW SLIGHTLY OVERVALUED BUT JUNK IS STILL RELATIVELY CHEAP. YOU CAN STILL BUY EQUITIES THAT YIELD MOR THAN SOME BONDS. THAT SHOULD NOT BE HAPPENING. THERE IS MISPRICING GOING ON.
On Dec 08 03:32 AM bbro wrote:
> It is very simple....S&P 500 is still cheap to aftertax NIPA
> corporate profits....