Sorry Bears, We're In A Secular Bull Market [View article]
Agreed the what if's do not include the downside What if's.
What if US fall sinks recession Or Europe decelerates more What if Israel attack Iran (oil at 150)
The world has been balancing on a pin head for past few years, and the politicians are not exactly making quick or sound decisions. CBs have just about exhausted their bag of tools so I am afraid anything that causes a double dip could quickly devolve into a mess.
I also think the factors that earnings are stretched have been helped by one time factors that are not repeatable. It will take actual revenue growth from here to keep this bull healthy.
Tell that too Japanese investors who bought at 39000 in 1989 and now its 11300 (after 33 percent 4 month rally). I do think Jpanese equities ahve bottomed but had you been 30 (prime equity investing age) at the time you bought in 1989 you would be 53 now and down 72 percent (not factoring in dividends but still ugly). Now the demographiics turned in Japan and they had deflation (stock track deflation down instead of inflation up). Now ithe demographics suck here too and while all the gold bugs think the printing presses will stoke inflation, it seems to me the CBs are printing heavily becuase they are terrified of deflation.
Now i am not saying deflation is coming, but with European Austerity throwing that continent into recession and are soon to be belt tightening and between 10 and 25% long term unemployment in the developed world, it is not a scenario that is impossible.
I have no bias here could care less if Dow goes to 20K or 10K, but i do agree with the article that the past 20 year bull before the downturn was Goldilocks for stocks and now not so much
Agreed lots of capital waiting to invest or in a bond bubble (probably the other shoe when the FED is done). At the same time there is a lot of capital that has left this country or has been destroyed. I am sure that 90% of people on this page net worth is less than it was 4 years ago or even 10 years ago and have less to invest. Throw in everyone's share of the 16 trillion dollar deficit and I would bet the middle class in the US has negative net worth if housing hasn't already crushed them. The problem is all the money is in corporations or the top 5%. Corporate earnings come from the other 70% who do not have cash or spending power (in small spurts maybe). That is why you are seeing revenues missing now people are spending less. Corporations need to sell to make earnings. The low hanging fruit of mass layoffs to improve earnings is over. Until jobs improve, the middle class get more buying power, and the overall leverage comes down further how do equities continue to fly. Maybe crashes are absorbed (assuming there is as much cash left as you think) but I doubt you see money rushing in hands over fist either. Wall Street has lost the trust of a generation and the baby boomer with the cash want to have whats left to retire. Their kids are unemployed and will probably not come into peak earning years for another 10 15 years. That leaves the Pros to keep chasing return in ever dwindling volume. Hence the long grinds up and the quick 15 to 20 percent corrections.
I think pessimism makes sense in light of headline over the past year. Its not like its a benign equity long environment. You have Europe which seems to be dragging its economies into depression thru austerity, You have new Government all over the middle east that still have no clue, you have Iran Israel situation, You have Chinese slowdown with equities in the toilet there (with nuch better long term growth rate than US), Then Finally you have the US that has inflated and propped up the economy correctly, but the day of paying the bill comes closer all the time. You also have politicians here (and globally) that just cannot seem to get their act together to make difficult decisions. While the fed may be easing the politicians are going to start cutting hopefully in an intelligent manner.
While I see the recent breakout in some indices as positive and perhaps indicating new long term bull, you also have indices like NYA and transports that haven't even taken 2011 highs so the rally is being led by fewer stocks like Apple and Google.
While i can imagine a new long term bull i can easily imagine waking up yo one of more of these scenarios exploding. Spain breaking up with Provence's ceding doesn't sound too bullish. Israel attacking Iran with oil at 150 plus doesn't sound too bullish. Fiscal cliff in US doesn't sound bullish. and economies globally sputtering with high unemployment with middle class with no cash doesn't sound bullish either. The main problem i have with buying into pessimism versus optimism debate is it doesn't really matter its only window dressing. If equities are going to fly we need none of the bad things to happen and the economies to start to improve. Think those that are pessimistic are only looking to get sleep at night not wanting to wake up to the 10 scenarios yet to be solved that could send equities in the toilet in a heart beat.
I think the assumption QE3 is baked in is wrong. First the FED is not targeting stock prices they are trying to keep rates down. QE3 if it sends stocks thru these major tops here would undermine the bond market and could actually make rates rise. The FED is obviously aware the market has bake in QE so will likely do a half measure like more operation twist to hold down yield curve or even extending ZIRP. I think with equities at all time post crash highs and with injection of liquidity by ECB, it is less urgent for QE3. QE does not translate to job growth especially if the second biggest economic block is slowing down. They will wait and see what effect the European easing will have and try to walk the fine line of not disappointing market by doing half measures. QE3 here that send bonds reeling and creates volatility would make QE4 suspect (will be suspect anyhow if we get to that) so i think they will save their bullet for the rainy day if and when Europe QE has not done the job.
The Last Innings Of The Bull Market [View article]
Market tops are hard to pick and certainly this one qualifies. Problem here is it a bit more binary in nature. Technically looking at setup you can make case for major breakout and huge run up. Or the triple top scenario which could be very damaging. Looking at Europe, Global Economic slowdown, Fiscal, uncertainty in regulatory climate, Mess in middle east with high commodity prices, and SP earnings flat at best going forward i do not see the major breakout scenario here from an over bought situation.
What i think you are seeing is players coming back from their Hampton holidays in August in which they had paired back positions. They have under-performed this bull for two years now and are jumping in chasing the market. This is typical Sept volatility expansion and will likely last week to a month more. However in light of deterioration in Fundamentals (market cheering bad news to get help from CBs) and 10 plus percent recent run up discounting bad news really doubt we will not have a setback soon. and I think it is more likely from sub 1450 than 1550.
Long-Term, Monthly S&P 500 Charts Suggest Bear Market May Be Beginning [View article]
There is political paralysis in the US the GOP will not pass anything that will help Obama win hence no help for the unemployed. Couple that with the debt ceiling mess to follow and the automatic spending cuts and tax hikes to take effect that will not be addressed until Nov. election (markets will already be pricing half of this problem by then) and they may not have enough time to forestall it.
US has many things that can send the markets lower. The only reason we haven't had to deal with our issues yet is the flight out of Europe is (or had been) keeping US assets especially bonds bid. When that flow stops and if the politicians are still acting like buffoons our bonds will not trade so well. Need to deal with the issues now rather than wait for the markets to force our hand. Unfortunately there is no political will
German Index Can Assist U.S. Investors [View article]
While the big 3 indices Dow, SP and Nasdaq have yet to break 200 day the broader NYSE index the NYA looks terrible and is below 200 day and key supports. While oversold now and perhaps we get a bounce in equities, NYA suggests sell the rallies unless European leaders pull out the bazooka. Half measures will not work and Europe is fabulous with half measures. A bandaid here could cause irreversible med term damage to global economy and hence markets.
Google Valuation Suggests A Reality Check With A Warning [View article]
Agree that google has been in sideways triangle and is testing 200 day moving average break below here suggests move to bottom of triangle maybe 500 region> However it is a bullish formation longer term and would be screaming buy at either side of 500. Also the fact that google has yet to monetize its phone business leaves huge upside in earnings. There are two key players in mobile right now and that is Apple and Google. Google will figure out a way to monetize this at some point once they have locked up decent market share. Unlike microsoft or dell they are in all the growing spaces. The stock is not expensive and would only sink to 500 levels in broader market swoon brought on by recession (imported from Europe)
This Is Crazy, Bring Back Glass-Steagall [View article]
Messed up regulatory system means tougher rules (Glass Steagall). Also notice those countries that do not have it aren't doing much better. Look at banks in Europe.
The Solar Bubble Has Officially Burst - Survivors Will Ultimately Capture More Market Share [View article]
They compete on razor thin margin but they get a lot of help. They get very easy loans from Govt owned banks. They get subsidies. I import stuff from China and while the official currency rate may be 6.3 certain industries that are being encouraged get subsidy in the form of better conversion rate. As an example manufacturer prefer Dollars to RMB (and yes i can pay in RMB too). The reason for this is the govt converts it at a preferable in industries they are promoting. They also lower these subsidies to industries they consider bad. I found this out one day when a metal manufacturer adjusted there price higher on me. The reason was the 13% subsidy they were getting on steel mugs was changed to 5%. The govt considered this industry heavy polluting and reduced their sunsidy. so while the official conversion rate may have been 6.3 they were converting at 7.2. Most of my manufacturers still prefer dollars and its not because they hang on to them.
The Solar Bubble Has Officially Burst - Survivors Will Ultimately Capture More Market Share [View article]
I agree completely. China is investing in the future (whether legal or not) and future technologies while we argue if there is indeed global warming or if the earth is 6000 years old. See a problem here. Any big project requires Govt investment (subsidies) or there would be much less progress. Think NASA our dominance in Aerospace technology over the last 50 years comes from Govt investment in this program.
I also believe that many of China's moves are security related. Look what happened when we left the rare earth mining market due to profitability. China became the loan producer and we have to beg them to increase supply for element that go into our military guidance systems. See a problem?
Main point here is there are other factors at play. If you want to remotely believe we continue to be a world leader you invest in schools, infrastructure and high tech as China is doing, 0r you stick your head in the sand and debate another 10 years whether there is indeed global warming.
While i agree that companies are safer the US debt with all the cash on hand. Keep in mind the era of paying no taxes is about to end. Ryan's plan has about as much chance of happening as i do of winning Lotto (mind you if i win I will root for it).
Austerity is coming to the US at the end of 2012 one way or another and the only question is when does that get factored in. Stock market usually anticipates so its likely before the end of they year. Only question is from where and when. I have heard here and 1600. I have been long for the run up but my view from 1400 is that you exit here. Even If i am wrong i definitely will get a chance to reload at these or better levels at some point. If we top out now maybe much better. Yes corporations have (notice the past tense) done well, but now they are hiring (spending). The dollar has turned bid (drag on earnings) and Europe and China have slowed quite a bit. It is likely we slow down and earnings miss.
No Growth, No Inflation, No Earnings [View article]
Sorry Bears, We're In A Secular Bull Market [View article]
What if US fall sinks recession
Or Europe decelerates more
What if Israel attack Iran (oil at 150)
The world has been balancing on a pin head for past few years, and the politicians are not exactly making quick or sound decisions. CBs have just about exhausted their bag of tools so I am afraid anything that causes a double dip could quickly devolve into a mess.
I also think the factors that earnings are stretched have been helped by one time factors that are not repeatable. It will take actual revenue growth from here to keep this bull healthy.
Stocks More Overvalued Than 1929 [View article]
Now i am not saying deflation is coming, but with European Austerity throwing that continent into recession and are soon to be belt tightening and between 10 and 25% long term unemployment in the developed world, it is not a scenario that is impossible.
I have no bias here could care less if Dow goes to 20K or 10K, but i do agree with the article that the past 20 year bull before the downturn was Goldilocks for stocks and now not so much
What Excessive Bullishness? [View article]
What Excessive Bullishness? [View article]
While I see the recent breakout in some indices as positive and perhaps indicating new long term bull, you also have indices like NYA and transports that haven't even taken 2011 highs so the rally is being led by fewer stocks like Apple and Google.
While i can imagine a new long term bull i can easily imagine waking up yo one of more of these scenarios exploding. Spain breaking up with Provence's ceding doesn't sound too bullish. Israel attacking Iran with oil at 150 plus doesn't sound too bullish. Fiscal cliff in US doesn't sound bullish. and economies globally sputtering with high unemployment with middle class with no cash doesn't sound bullish either. The main problem i have with buying into pessimism versus optimism debate is it doesn't really matter its only window dressing. If equities are going to fly we need none of the bad things to happen and the economies to start to improve. Think those that are pessimistic are only looking to get sleep at night not wanting to wake up to the 10 scenarios yet to be solved that could send equities in the toilet in a heart beat.
The S&P 500: Through the Loop! [View article]
The Last Innings Of The Bull Market [View article]
What i think you are seeing is players coming back from their Hampton holidays in August in which they had paired back positions. They have under-performed this bull for two years now and are jumping in chasing the market. This is typical Sept volatility expansion and will likely last week to a month more. However in light of deterioration in Fundamentals (market cheering bad news to get help from CBs) and 10 plus percent recent run up discounting bad news really doubt we will not have a setback soon. and I think it is more likely from sub 1450 than 1550.
Long-Term, Monthly S&P 500 Charts Suggest Bear Market May Be Beginning [View article]
US has many things that can send the markets lower. The only reason we haven't had to deal with our issues yet is the flight out of Europe is (or had been) keeping US assets especially bonds bid. When that flow stops and if the politicians are still acting like buffoons our bonds will not trade so well. Need to deal with the issues now rather than wait for the markets to force our hand. Unfortunately there is no political will
German Index Can Assist U.S. Investors [View article]
Europe needs some growth
Google Valuation Suggests A Reality Check With A Warning [View article]
This Is Crazy, Bring Back Glass-Steagall [View article]
The Solar Bubble Has Officially Burst - Survivors Will Ultimately Capture More Market Share [View article]
The Solar Bubble Has Officially Burst - Survivors Will Ultimately Capture More Market Share [View article]
The Solar Bubble Has Officially Burst - Survivors Will Ultimately Capture More Market Share [View article]
I also believe that many of China's moves are security related. Look what happened when we left the rare earth mining market due to profitability. China became the loan producer and we have to beg them to increase supply for element that go into our military guidance systems. See a problem?
Main point here is there are other factors at play. If you want to remotely believe we continue to be a world leader you invest in schools, infrastructure and high tech as China is doing, 0r you stick your head in the sand and debate another 10 years whether there is indeed global warming.
The Great Bull-Bear Disconnect [View article]
Austerity is coming to the US at the end of 2012 one way or another and the only question is when does that get factored in. Stock market usually anticipates so its likely before the end of they year. Only question is from where and when. I have heard here and 1600. I have been long for the run up but my view from 1400 is that you exit here. Even If i am wrong i definitely will get a chance to reload at these or better levels at some point. If we top out now maybe much better. Yes corporations have (notice the past tense) done well, but now they are hiring (spending). The dollar has turned bid (drag on earnings) and Europe and China have slowed quite a bit. It is likely we slow down and earnings miss.