Bernanke's Testimony Reinforces The Status Quo [View article]
I've read many SA articles the past few years, but in my opinion yours is one of the most well written, clear, concise and accurate overview of this Federal Reserve.
Although you didn't offer a conclusion or specifically your view on this latest testimony to Congress, it came across clear as a bell in your article....and I agree with your thesis.
I'd like to weigh in on part of your article addressing job creation in the US...There are three primary headwinds.....Structural unemployment, Labor unions, and the uncertainty of Obamacare. Because these three problems will not, or cannot be resolved anytime soon, I think Mr. Bernanke will remain stuck inside the box of QE, with virtually no viable exit strategy.
"Bernanke saves the day". Other than QE-1 back in 2008, I'd argue that Bernanke hasn't saved anything since then.
There is no empirically validated evidence (that I'm aware of) indicating that QE's 2-3 have reached their end point.
I realize the thesis of your article is more focused on the Fed's communication, I thought I'd respond giving my view, based on the fact that there will probably never, ever be an end to the Fed's stimulus, tapering or not. The Fed may have an exit strategy, but he can't or won't use the strategy, because he's stuck....Stuck in the sense that he knows his policy is supporting the market right now, but not the economy.
The other key issue is we're mired in structural unemployment, i.e. the unemployed for the most part don't have the necessary skill sets for the available jobs....therefore 6.5% is a pipe dream for many years.
The Stock Market - Which Side Are You On? [View article]
Well written, but since I consider your title a rhetorical question, I'll respond with a rhetorical response.
Too much of the Federal government is the worst thing for our country, the economy, and the financial markets. The Federal reserve has way too much power, and we should not have to give in to his policies, even it means making the stock market grossly overbought. Hard working savers should not have to be robbed of their savings to promote risky assets, only to get burned by days like today.
The Fed wants to get to 6.5% unemployment, but the reality is that the unemployed do not match up with the skill sets for most of the jobs available, hence structural unemployment.
I think the Fed is stuck Gary, i.e. he may have an exit strategy, but he's afraid to use it, and/or he doesn't know when he should employ that strategy. Josh Brown is paid to be bullish. I've never heard any bearish words out of Brown, Cramer, Birinyi, Paulsen, Tepper, and many others. That's what they do, and I get that.
To your point, yes, this is a different stock market than 1999, but more so because of the prevalence of high speed computers, not so much because of valuations, in my opinion. Don't get me wrong, no this is not another dot.com era....But in order for the market to stay at these levels, or go higher, someone has to be willing to pay a higher price to make another high.....and the shorts are almost gone (until today), the great rotation is a myth until it's not a myth, and most (not all) money managers are all in.....Which all means to me the market won't go much higher until a substantive correction takes place.
S&P 1800: The Great Rotation Is Real [View article]
Sadly, these articles are becoming so prevalent in an overbought market, just like the articles that came out in early 2009 in the very oversold market, that said the market will go much lower, so stay out of equities.
There is no evidence of a "great rotation", and the Fed is clearly creating another bubble, much like the Greenspan years. Dodging the normal business cycle is a mistake.
I'm not calling you out, because everyone has their own self-fulfilling prophecy; yours is the Lipper fund. The market is grossly overbought, and could stay that way. But a correction soon would be very healthy, and would allow the pension funds or those holding bonds to enter the market. In today's market, i.e. May 20,2013, I think cash is safer until there's consolidation, backing and filling, and yes a correction.
Sure, discourage people from taking a profit after a parabolic run since November 2012, and a massive run since March 2009.
Corporate results, esp. revenue, and economic reports have not been positive. Any minor improvements in the economy have been interpreted as great news by the markets, the slew of negative news has been ignored.
Cash at this level of the market is safer than chasing overbought stocks. Let the prices come to you. Anyone who doesn't think we're in for a substantive correction shouldn't be in the market at all.
But I think I understand your point. Buy stocks after the market corrects, and don't buy if it doesn't correct. That makes more sense.
Lessons For This Week: Still Safe To Enter This Rally? - Part 1 [View article]
You said Jeff Saut believes the S&P will hit "at least" 1700 by the end of the first quarter. I believe the first quarter ended April 30, did it not?
Tepper's interview created a self-fulfilling prophecy. If he said the market was overbought and we should consider taking profits, do you think the market would have dropped 2%? I don't. The financial media likes to think it has all the answers for stock market moves, but they don't.
Good News: Stocks Will Be Cheap Forever [View article]
I get your point, but in reality the Fed is stuck. He's stuck, not because he doesn't have a viable exit strategy, but because he can't use that strategy.
This is a very dangerous game, and although I understand your thesis, I respectfully disagree. One of this president's mandates was to bridge the wealth gap, using a populist approach. I don't agree with that policy, and obviously it's not happening anyway, in fact the gap has grown much wider. If the middle class majority in this country knew and understood what the Fed is doing, there would be a huge backlash....or not (apathy is very prevalent).
So yes, stocks could go up forever, and to your point, may remain cheap. But with a persistently weak global economy, and weak commodities, P/E's will need to contract, sooner rather than later.
What Equity Bubble? This Bull Run Has Only Just Begun [View article]
Let me be the first one on this thread to tell you I'm so glad you wrote this article, because the more articles like yours, we realize we're getting very close to the topping process.
Fundamentals do not support this market, and pension funds may be late to the party, but they're not stupid. It is a bubble....but everyone is either unaware of that, or in denial, more so the latter. The NY Fed and the Philly Fed reported their regional activity this week, and both contracted, but who cares, right?
Earnings and revenue have been awful. I hope for the sake of those fully invested that everyone doesn't head for the exit gates at once.
Time To Sell Stocks? Consult This Bear Market Checklist First [View article]
In 2009 near the March lows, I kept reading articles that the end was near, meaning the markets would go much lower.
Today, we hear every day how "cheap" stocks are, in an effort to justify this parabolic move based on the Fed, and not on fundamentals. The media looks to create a self-fulfilling prophecy.
As always, this time will not be different. We should embrace the normal business cycle, not try to bypass it with Fed induced liquidity. This market desperately needs a healthy correction. Without one, I fear we may be in for crash part deux.
Stock prices are influenced by earnings, valuations, technicals, and other metrics.
Everything else, including the Fed, is minutia. The Fed may not kill this rally, but the sellers will. Fundamentals do not support what is now a parabolic advance.
The VIX and leveraged VIX plays are rising today, in spite of yet another market advance (Dow up over 60 as I type). Your thesis assumes the Fed only controls market advances and not declines. Since the global economy is basically weak, and there's still no final demand, I respectfully disagree with your thesis.
What do you expect Fed reps to say? The market is grossly overvalued? These guys are extensions of the Fed chairman. Is this supposed to encourage others to buy more stocks on margin?
Stocks' value is subjective phenomena, plain and simple. Sure, analyst model metrics to justify their calls, but at the end of the day, the stock is worth what the next guy is willing to pay for it.
I'd argue that YOUR quote about margin debt may be a lack of understanding or distortion. This is not about whether margin debt is "cheap" or not, it's about the fact that margin debt is being utilized at a near record level to fund mostly speculative trades or investments.
In addition, the leverage is not hedged properly, which would probably exacerbate a market decline. By the way, a healthier economy and stock market is one that allows the effects of the normal business cycles, including recessions. Everything about this market advance is artificial, as there's still limited final demand, and the basic fundamentals do not support these new highs.
Why is the Dow closing over 15,000 for the week "thrilling"? Why does the financial media and others try to create a self-fulfilling prophecy in the markets? Is is fair to say you're pumping the markets as well as your prior trades in an effort to promote your subscription based newsletter?
Do you think we'll wake up one morning and the futures and the markets will be down big with not much explanation or reason? Do you think a black swan would catch the entire market off guard and would crush the portfolios of most those who don't hedge their bets or at least buy volatility?
What makes you think those with big profits from March 2009, or even November 2012 won't take their profits?
Not only is this a mindless bull market as you call it, but it's based solely on a casino mentality rather than fundamentals. I'm not saying that's bad, and I'm certainly making money, both long and short, but you have to be realistic....This will end, and when it does, it will probably end badly......
Equities: Can You Afford Not To Be Invested? [View article]
When the financial media constantly dwells on something, it doesn't happen. The "sell in May" thesis appears in almost every article. If everyone thinks the market will do something, it usually does the opposite. The only thing the so called strategists can hang their hats on is historical trends...and that's not working.
Earlier this year the media focused on a possible "head and shoulders" formation in the S&P. It never played out. Now all I'm reading are articles like yours, how pensions will "support the market" going forward, "stocks are cheap", etc.
For anyone to think traders/investors won't take profits from March 2009 or even November 2012, they're naive. They call the smart money smart for a reason. They know when to enter and have a strategy when to exit the market. Pension funds, retail traders and others have been burned in the past....It will probably happen again.
And God help all those fully invested if any hint of a black swan flies into town....because practically no one is hedged properly.
Secular Bear Market For Stocks Is Over [View article]
"Sign up for a free trial"......There it is, the agenda.....everyone has one. It's not about the SA article anymore. But I'm not singling you out, you may have a valid service offer.
Jeremy Siegel is on CNBC every other day saying the Dow will hit 18,000-20,000 in the next year or so. You see Jeremy wrote a book about his lofty predictions, and he wants you to buy the book.
Bernanke's Testimony Reinforces The Status Quo [View article]
Although you didn't offer a conclusion or specifically your view on this latest testimony to Congress, it came across clear as a bell in your article....and I agree with your thesis.
I'd like to weigh in on part of your article addressing job creation in the US...There are three primary headwinds.....Structural unemployment, Labor unions, and the uncertainty of Obamacare.
Because these three problems will not, or cannot be resolved anytime soon, I think Mr. Bernanke will remain stuck inside the box of QE, with virtually no viable exit strategy.
Bernanke Saves The Day [View article]
There is no empirically validated evidence (that I'm aware of) indicating that QE's 2-3 have reached their end point.
I realize the thesis of your article is more focused on the Fed's communication, I thought I'd respond giving my view, based on the fact that there will probably never, ever be an end to the Fed's stimulus, tapering or not. The Fed may have an exit strategy, but he can't or won't use the strategy, because he's stuck....Stuck in the sense that he knows his policy is supporting the market right now, but not the economy.
The other key issue is we're mired in structural unemployment, i.e. the unemployed for the most part don't have the necessary skill sets for the available jobs....therefore 6.5% is a pipe dream for many years.
The Stock Market - Which Side Are You On? [View article]
Too much of the Federal government is the worst thing for our country, the economy, and the financial markets. The Federal reserve has way too much power, and we should not have to give in to his policies, even it means making the stock market grossly overbought. Hard working savers should not have to be robbed of their savings to promote risky assets, only to get burned by days like today.
The Fed wants to get to 6.5% unemployment, but the reality is that the unemployed do not match up with the skill sets for most of the jobs available, hence structural unemployment.
I think the Fed is stuck Gary, i.e. he may have an exit strategy, but he's afraid to use it, and/or he doesn't know when he should employ that strategy. Josh Brown is paid to be bullish. I've never heard any bearish words out of Brown, Cramer, Birinyi, Paulsen, Tepper, and many others. That's what they do, and I get that.
To your point, yes, this is a different stock market than 1999, but more so because of the prevalence of high speed computers, not so much because of valuations, in my opinion. Don't get me wrong, no this is not another dot.com era....But in order for the market to stay at these levels, or go higher, someone has to be willing to pay a higher price to make another high.....and the shorts are almost gone (until today), the great rotation is a myth until it's not a myth, and most (not all) money managers are all in.....Which all means to me the market won't go much higher until a substantive correction takes place.
Thanks for the article.
S&P 1800: The Great Rotation Is Real [View article]
There is no evidence of a "great rotation", and the Fed is clearly creating another bubble, much like the Greenspan years. Dodging the normal business cycle is a mistake.
I'm not calling you out, because everyone has their own self-fulfilling prophecy; yours is the Lipper fund. The market is grossly overbought, and could stay that way. But a correction soon would be very healthy, and would allow the pension funds or those holding bonds to enter the market. In today's market, i.e. May 20,2013, I think cash is safer until there's consolidation, backing and filling, and yes a correction.
Read This Before Selling Stocks [View article]
Corporate results, esp. revenue, and economic reports have not been positive. Any minor improvements in the economy have been interpreted as great news by the markets, the slew of negative news has been ignored.
Cash at this level of the market is safer than chasing overbought stocks. Let the prices come to you. Anyone who doesn't think we're in for a substantive correction shouldn't be in the market at all.
But I think I understand your point. Buy stocks after the market corrects, and don't buy if it doesn't correct. That makes more sense.
Lessons For This Week: Still Safe To Enter This Rally? - Part 1 [View article]
Tepper's interview created a self-fulfilling prophecy. If he said the market was overbought and we should consider taking profits, do you think the market would have dropped 2%? I don't. The financial media likes to think it has all the answers for stock market moves, but they don't.
Good News: Stocks Will Be Cheap Forever [View article]
This is a very dangerous game, and although I understand your thesis, I respectfully disagree. One of this president's mandates was to bridge the wealth gap, using a populist approach. I don't agree with that policy, and obviously it's not happening anyway, in fact the gap has grown much wider. If the middle class majority in this country knew and understood what the Fed is doing, there would be a huge backlash....or not (apathy is very prevalent).
So yes, stocks could go up forever, and to your point, may remain cheap. But with a persistently weak global economy, and weak commodities, P/E's will need to contract, sooner rather than later.
What Equity Bubble? This Bull Run Has Only Just Begun [View article]
Fundamentals do not support this market, and pension funds may be late to the party, but they're not stupid. It is a bubble....but everyone is either unaware of that, or in denial, more so the latter. The NY Fed and the Philly Fed reported their regional activity this week, and both contracted, but who cares, right?
Earnings and revenue have been awful. I hope for the sake of those fully invested that everyone doesn't head for the exit gates at once.
Time To Sell Stocks? Consult This Bear Market Checklist First [View article]
Today, we hear every day how "cheap" stocks are, in an effort to justify this parabolic move based on the Fed, and not on fundamentals. The media looks to create a self-fulfilling prophecy.
As always, this time will not be different. We should embrace the normal business cycle, not try to bypass it with Fed induced liquidity. This market desperately needs a healthy correction. Without one, I fear we may be in for crash part deux.
The Fed Will Not Kill This Rally [View article]
Everything else, including the Fed, is minutia. The Fed may not kill this rally, but the sellers will. Fundamentals do not support what is now a parabolic advance.
The VIX and leveraged VIX plays are rising today, in spite of yet another market advance (Dow up over 60 as I type). Your thesis assumes the Fed only controls market advances and not declines. Since the global economy is basically weak, and there's still no final demand, I respectfully disagree with your thesis.
Fed Says U.S. Stocks Are Cheap [View article]
Stocks' value is subjective phenomena, plain and simple. Sure, analyst model metrics to justify their calls, but at the end of the day, the stock is worth what the next guy is willing to pay for it.
This Time It's Different? [View article]
In addition, the leverage is not hedged properly, which would probably exacerbate a market decline. By the way, a healthier economy and stock market is one that allows the effects of the normal business cycles, including recessions. Everything about this market advance is artificial, as there's still limited final demand, and the basic fundamentals do not support these new highs.
Thrilling Friday 15,000 Finish [View article]
Do you think we'll wake up one morning and the futures and the markets will be down big with not much explanation or reason? Do you think a black swan would catch the entire market off guard and would crush the portfolios of most those who don't hedge their bets or at least buy volatility?
What makes you think those with big profits from March 2009, or even November 2012 won't take their profits?
Not only is this a mindless bull market as you call it, but it's based solely on a casino mentality rather than fundamentals. I'm not saying that's bad, and I'm certainly making money, both long and short, but you have to be realistic....This will end, and when it does, it will probably end badly......
Equities: Can You Afford Not To Be Invested? [View article]
Earlier this year the media focused on a possible "head and shoulders" formation in the S&P. It never played out. Now all I'm reading are articles like yours, how pensions will "support the market" going forward, "stocks are cheap", etc.
For anyone to think traders/investors won't take profits from March 2009 or even November 2012, they're naive. They call the smart money smart for a reason. They know when to enter and have a strategy when to exit the market. Pension funds, retail traders and others have been burned in the past....It will probably happen again.
And God help all those fully invested if any hint of a black swan flies into town....because practically no one is hedged properly.
Secular Bear Market For Stocks Is Over [View article]
Jeremy Siegel is on CNBC every other day saying the Dow will hit 18,000-20,000 in the next year or so. You see Jeremy wrote a book about his lofty predictions, and he wants you to buy the book.