• Tag Archives Stock Market
  • Janet Yellen: Trump’s Tax Cut Could Play a Negative Role in Next Downturn

    The outgoing Chair of the Federal Reserve, Janet Yellen, held her last press conference yesterday following the Federal Open Market Committee’s decision to hike the Feds Fund rate by one-quarter percentage point, bringing its target range to 1-1/4 to 1-1/2 percent.
    Given the growing reports from market watchers that the stock market has entered the bubble stage and could pose a serious threat to the health of the economy should the bubble burst, CNBC’s Steve Liesman asked Yellen during the press conference if there are ‘concerns at the Fed about current market valuations.’
    Yellen gave a response which may doom her from a respected place in history. She stated:
    ‘So let me start Steve with the stock market generally. Of course the stock market has gone up a great deal this year and we have in recent months characterized the general level of asset valuations as elevated. What that reflects is simply the assessment that looking at price-earnings ratios and comparable metrics for other assets other than equities we see ratios that are in the high end of historical ranges. And so that’s worth pointing out.
    ‘But economists are not great at knowing what appropriate valuations are. We don’t have a terrific record. And the fact that those valuations are high doesn’t mean that they’re necessarily overvalued.

    This post was published at Wall Street On Parade By Pam Martens and Russ Marte.


  • Bond Markets Really Are Signalling A Slowdown

    Authored by Lakshman Achuthan and Anirvan Banerji via Bloomberg.com,
    Analysts shouldn’t dismiss the yield curve’s message just because inflation expectations have been declining in recent years. When it comes to the economic outlook, the bond market is smarter than the stock market. That Wall Street adage appears to be on the money from a cyclical vantage point, with key indicators in the fixed-income markets independently corroborating slowdown signals from the Economic Cycle Research Institute’s leading indexes.
    The yield curve is widely considered to be among the most prescient indicators. That’s why its flattening this year has been troublesome for an otherwise optimistic consensus to explain away.
    This hasn’t stopped optimistic analysts from dismissing the yield curve’s message on the grounds that inflation expectations have been declining in recent years, or that foreign central banks like the European Central Bank and the Bank of Japan continue to artificially suppress their bond yields, pulling down U. S. yields. We’re reminded of Sir John Templeton’s warning that ‘this time it’s different’ are the “four most costly words in the annals of investing” — but that’s effectively what it means to simply ignore the slowdown signals emanating from the fixed-income markets.
    Of course, there’s no Holy Grail in the world of forecasting, which is why we look at a wide array of leading indexes that each includes many inputs. From that vantage point, the yield curve flattening actually makes a lot of sense.

    This post was published at Zero Hedge on Dec 15, 2017.


  • 15 Market Red Flag: Stocks May Be About To Tank: ‘If There’s One Thing That You Need To Pay Attention To It’s This…’

    Stock and bond markets may be teetering on the edge of a widespread crash following a stellar year that has seen all-time highs across just about every major asset class. Earlier today Zero Hedge reported that Bloomberg market commentator Mark Cudmore says markets could be in for a violent downside break in the weeks ahead.
    It’s a sentiment also shared by Traders Choice analyst Greg Mannarino, who up until this point has been generally bullish on short-term market movements. On Thursday, however, Mannarino reports that bond buying, which has been used to prop up stocks through massive cash injections in recent weeks and months, failed to keep stocks from falling.
    This, says Mannarino, is a major red flag that could signal a reversal going forward:
    If there’s one thing that you need to pay attention to it’s this… savage bond buying occurred today in an attempt to re-prop up the stock market and it didn’t work…
    They’re trying to play a game here and it’s been working time and time again…
    Without fail every single time… except for today… that has worked.

    This post was published at shtfplan on December 15th, 2017.


  • Dear Janet Yellen: Here Is Your Own Watchdog Warning About Financial Stability Risks In “Red And Orange”

    In the most interesting exchange during Janet Yellen’s final news conference, CNBC’s seemingly flustered Steve Liesman asked Janet Yelen a question which in other times would have led to his loss of FOMC access privileges: “Every day it seems the stock market goes up triple digits on the Dow Jones: is it now, or will it soon become a worry for the central bank that valuations are this high?”
    Yellen’s response was predictable, colorfully so in fact.
    Of course, the stock market has gone up a great deal this year. And we have in recent months characterized the general level of asset valuations as elevated. What that reflects is simply the assessment that looking at price-earnings ratios and comparable metrics for other assets other than equities, we see ratios that are in the high end of historical ranges. And so that’s worth pointing out. But economists are not great at knowing what appropriate valuations are, we don’t have the terrific record. And the fact that those valuations are high doesn’t mean that they’re necessarily overvalued.


    This post was published at Zero Hedge on Dec 14, 2017.


  • Fed’s Janet Yellen: Stock Market Bubble Not Seen as Major Risk Factor

    The outgoing Chair of the Federal Reserve, Janet Yellen, held her last press conference yesterday following the Federal Open Market Committee’s decision to hike the Feds Fund rate by one-quarter percentage point, bringing its target range to 1-1/4 to 1-1/2 percent.
    Given the growing reports from market watchers that the stock market has entered the bubble stage and could pose a serious threat to the health of the economy should the bubble burst, CNBC’s Steve Liesman asked Yellen during the press conference if there are ‘concerns at the Fed about current market valuations.’
    Yellen gave a response which may doom her from a respected place in history. She stated:
    ‘So let me start Steve with the stock market generally. Of course the stock market has gone up a great deal this year and we have in recent months characterized the general level of asset valuations as elevated. What that reflects is simply the assessment that looking at price-earnings ratios and comparable metrics for other assets other than equities we see ratios that are in the high end of historical ranges. And so that’s worth pointing out.
    ‘But economists are not great at knowing what appropriate valuations are. We don’t have a terrific record. And the fact that those valuations are high doesn’t mean that they’re necessarily overvalued.

    This post was published at Wall Street On Parade on December 14, 2017.


  • Yellen’s Big Goodbye (And What She’s Leaving Behind)

    The past three Fed Chairs before Yellen all had their own crisis to deal with.
    Volcker had the disaster of the early 1980’s as he struggled to tame inflation with double digit interest rates. That helped contribute to the Latin American debt crisis, and the subsequent global bear markets in stocks.
    He handed over the reins to Greenspan in the summer of ’87 and within months, the new Fed Chairman faced the largest stock market crash since the 1920’s. That trial by fire was invaluable for Greenspan, as he faced a second crisis when the DotCom bubble burst at the turn of the century.
    His successor, Ben Bernanke also did not escape without a record breaking financial panic when the real estate collapse hit the global economy especially hard in 2007.
    But Yellen? Nothing. Nada. She has presided over the least volatile, most steady, market rally of the past century. Was she lucky? Or was this the result of smart policy decisions? I tend to attribute it more to luck, but it’s tough to argue that she made any large mistakes. Sure you might quibble about the rate of interest rate increases. And her critics will argue that economic growth, and more importantly, wage increases have been especially anemic under her watch, but to a large degree, those variables are out of her hands.

    This post was published at Zero Hedge on Dec 13, 2017.


  • The Stock Market and the FOMC

    An Astonishing Statistic
    As the final FOMC announcement of the year approaches, we want to briefly return to the topic of how the meeting tends to affect the stock market from a statistical perspective. As long time readers may recall, the typical performance of the stock market in the trading days immediately ahead of FOMC announcements was quite remarkable in recent decades. We are referring to the Seaonax event study of the average (or seasonal) performance across a very large number of events, namely the past 160 monetary policy announcements and the 10 trading days surrounding them. It looks as follows:

    This post was published at Acting-Man on December 12, 2017.


  • The “Exit” Problem

    Last week, I discussed the issue of ‘bubbles’ in the market. To wit:
    ‘Market bubbles have NOTHING to do with valuations or fundamentals.’
    Hold on…don’t start screaming ‘heretic’ and building gallows just yet. Let me explain.
    Stock market bubbles are driven by speculation, greed, and emotional biases – therefore valuations and fundamentals are simply a reflection of those emotions.
    In other words, bubbles can exist even at times when valuations and fundamentals might argue otherwise. Let me show you a very basic example of what I mean. The chart below is the long-term valuation of the S&P 500 going back to 1871.’

    This post was published at Zero Hedge on Dec 11, 2017.


  • Why Do You Keep Doing This To Yourself?

    As I am known to do, I will peruse articles on the web to find some interesting tidbits. And, I found one in one of Lance Robert’s recent posts.
    Within this article, he cited a Doug Kass note, which stated:
    ‘Despite many who are suggesting this has been a ‘rational rise’ due to strong earnings growth, that is simply not the case as shown below . . . Since 2014, the stock market has risen (capital appreciation only) by 35% while reported earnings growth has risen by a whopping 2%. A 2% growth in earnings over the last 3-years hardly justifies a 33% premium over earnings.
    Of course, even reported earnings is somewhat misleading due to the heavy use of share repurchases to artificially inflate reported earnings on a per share basis. However, corporate profits after tax give us a better idea of what profits actually were since that is the amount left over after those taxes were paid.
    “Again we see the same picture of a 32% premium over a 3% cumulative growth in corporate profits after tax. There is little justification to be found to support the idea that earnings growth is the main driver behind asset prices currently.
    We can also use the data above to construct a valuation measure of price divided by corporate profits after tax. As with all valuation measures we have discussed as of late, and forward return expectations from such levels, the P/CPATAX ratio just hit the second highest level in history.”
    So, what is Lance’s conclusion from the Kass note? ‘The reality, of course, is that investors are simply chasing asset prices higher as exuberance overtakes logic.’
    And, all of this leaves me scratching my head.

    This post was published at GoldSeek on 11 December 2017.


  • Crypto-Cornucopia Part 4 – “Without It, You’re Talking Mad Max”

    Authored by Dr. D via Raul Ilargi Meijer’s The Automatic Earth blog,
    Part 1 “Bitcoin Is A Trust Machine” here.
    Part 2 “This System Is Garbage, How Do We Fix It?” here.
    Part 3 “A System With No Justice, No Order, No Rules, & No Predictability” here.
    Well, all parts of the system rely on accurate record-keeping.
    Look at voting rights: we had a security company where 20% more people voted than there were shares. Think you could direct corporate, even national power that way? Without records of transfer, how do you know you own it? Morgan transferred a stock to Schwab but forgot to clear it. Doesn’t that mean it’s listed in both Morgan and Schwab? In fact, didn’t you just double-count and double-value that share? Suppose you fail to clear just a few each day. Before long, compounding the double ownership leads to pension funds owning 2% fake shares, then 5%, then 10%, until stock market and the national value itself becomes unreal. And how would you unwind it?
    Work backwards to 1999 where the original drop happened? Remove 10% of CALPERs or Chicago’s already devastated pension money? How about the GDP and national assets that 10% represents? Do you tell Sachs they now need to raise $100B more in capital reserves because they didn’t have the assets they thought they have? Think I’m exaggerating? There have been several companies who tired of these games and took themselves back private, buying up every share…only to find their stock trading briskly the next morning. When that can happen without even a comment, you know fraud knows no bounds, a story Financial Sense called ‘The Crime of the Century.’ No one blinked.

    This post was published at Zero Hedge on Dec 9, 2017.


  • Shocking New Stock Market Prediction Shows When We’ll Hit a Top

    The current bull market is in its ninth year, but Money Morning Liquidity Specialist Lee Adler’s newest stock market prediction shows that we are now in its final stages. In fact, he sees the S&P 500 hitting its final high sometime in the first quarter of 2018.
    As December unfolds, we’ve seen a breakout in stocks, and Adler’s technical analysis bumped up his long-term price target on the S&P 500 to 2,800. That’s based on his work with market cycles and published in his Wall Street Examiner Pro Trader Market Updates each week. Simply put, by rising above 2,630, the market’s character changed for the better, suggesting one more leg higher.
    However, December looks like the last chance to ride the current bull markethigher before conditions change and a bear market becomes likely…
    Stock Market Prediction: Expect a Market Top in Q1
    Pundits considered the U. S. Federal Reserve’s quantitative easing (QE) program as the punch bowl keeping the recovery party going and goosing the economy and the stock market for several years.
    However, as Adler has been warning, things will change in 2018…
    This Book Could Make You a Millionaire: The secrets in this book have produced 42 chances to double, triple, and even quadruple your money this year alone. Claim your free copy…
    And it already has, now that the Fed’s bond purchases are over. Plus, we’ve already seen the first of several planned hikes in short-term interest rates.
    So far, it has not made much of a dent.
    However, the forces of monetary policy and liquidity will be hostile to the markets in 2018. The Fed’s program, which it calls ‘normalization,’ is designed to reduce the size of its balance sheet.

    This post was published at Wall Street Examiner on December 6, 2017.


  • Can You Trust this Stock Market? Warning Signs Grow.

    Some of the same warning signs that emerged before the 1929 to 1933 market crash, the tech mania crash of 2000, and the epic Wall Street meltdown of 2008 are flashing red.
    If you have significant amounts of your 401(k) invested in equity mutual funds (that is, those invested in stocks), it’s time to take an objective appraisal of today’s market versus historic benchmarks.
    This is also a good time to remember that markets have lost as much as 50 percent of their value from peak to trough in the last 20 years. If that’s more pain than you’re prepared to suffer, it may be time to trim back your exposure.
    We’ll get to the specifics on today’s market shortly, but first some necessary background.
    In the market crash of 1929 to 1933, the stock market lost 90 percent of its value. It did not return to the level of 1929 until 1954 – a quarter of a century later.
    There is some basis to speculate that the bear market of October 2007 to March 2009, which included the epic Wall Street crash of 2008, would have produced far more serious pain than the 50 percent retracement in the S&P 500 that did occur – perhaps pain on the level of 1929 to 1933 – had it not been for the secret $16 trillion in almost zero-interest loans that the Federal Reserve Bank of New York sluiced into the major brokerage firms on Wall Street – which was on top of the hundreds of billions of dollars in bailout funds that were authorized by Congress.

    This post was published at Wall Street On Parade By Pam Martens and Russ Marte.


  • Record Calm Stock Market Gets A Shock

    After a record run of muted movement, will recent volatility send negative shock waves through stock market?
    The recent uptick in stock volatility has some investors on edge (OK, it is mostly just financial news editors on edge). The truth is, while volatility over the past week has seen an increase, it is not all that far away from the historical norm. Last Thursday through Monday, for example, the Dow Jones Industrial Average (DJIA) experienced 3 straight ‘volatile’ days, with daily ranges of between 1% and 1.6% on all 3 days. Looking historically, however, we find that the average daily range in the DJIA over the last 90 years is 1.6%. Even during the current bull market since 2009, the average range is 1.08%. Thus, the recent action should hardly be characterized as volatile.
    The reason it perhaps seems so tumultuous is because we are emerging from a long stretch of calm in the market – record calm, at that.

    This post was published at Zero Hedge on Dec 7, 2017.


  • Mount Vesuvius Anyone?

    ‘In the face of a shock, investors may be surprised to find themselves jammed running for the exit.’ That quote is from Paul Tudor Jones, who was one of the pioneers of the modern hedge fund and is considered a brilliant investor and trader. He went on to say that things are ‘on the verge of a significant change’ and that the current market reminds him of 1999.
    The current market reminds me of the demise of Pompeii, which was destroyed by the massive volcanic eruption of Mt Vesuvius in 79 AD. Pompeii was a prosperous city of the Roman Empire on the coast of southwest Italy. It sits at the base of Mt. Vesuvius, a volcano that had been dormant for a long time. Earthquakes and seismic activity, scientists believe, began to ‘warn’ the population of Pompeii roughly 17 years before the big eruption, when a massive earthquake largely leveled Pompeii. Shortly before the eruption more signs began occurring, hinting that something wasn’t right. Though some people evacuated the area, most of Pompeii’s populace was not worried. The rest is history.
    Though there are many warning signs, similar to the citizens of Pompeii living at the base of an active volcano, the American public does not seem the least worried
    about having their money in the stock market. Retail margin debt, at 100% of market capitalization, is at its highest ever. The percentage of U. S. household wealth (not including home equity) invested in stocks in some form is in its 94th percentile. This is the highest allocation to equities since just before the tech bubble popped in 2000. In other words, despite the numerous warnings for those paying attention, investors have piled most of their savings/wealth into the stock market with complete disregard to the growing probability of a down-side accident.

    This post was published at Investment Research Dynamics on December 7, 2017.


  • The Santa Claus Rally is Especially Pronounced in the DAX

    The Gift that Keeps on Giving Every year a certain stock market phenomenon is said to recur, anticipated with excitement by investors: the Santa Claus rally. It is held that stock prices typically rise quite frequently and particularly strongly just before the turn of the year.
    ***
    I want to show you the Santa Claus rally in the German DAX Index as an example. Price moves are often exaggerated in the German stock market, which leads to quite pronounced – and hence profitable – seasonal trends.
    Recurring trends can be discerned at a glance on a seasonal chart The chart below is not a standard chart that depicts a price trend over a specific time period. Rather, this seasonal chart shows the typical seasonal pattern of the German DAX Index. It illustrates the average returns generated by the index in the course of a year over the past 20 years. The horizontal axis shows the time of the year, the vertical axis shows the price information indexed to 100.

    This post was published at Acting-Man on December 7, 2017.


  • The Global Equity Market’s 20 Trillion Dollar Mistake Exposed

    Last week there were all sorts of articles hitting the newswires about the fact the world’s stock market total capitalization was pushing $100 trillion.
    This article and chart from Business Insider sums up the reaction:
    We first saw the chart in a note from CLSA analyst Damian Kestel: ‘I almost fell off my chair when I saw this and went to check that Bloomberg hadn’t reclassified some data… but no. I included this chart of total equity market cap in [a previous note to clients] in early June this year. At that point total world market cap was US$74 trillion, it’s now US$93 trillion,’ he wrote. (The chart excludes ETFs and the like, so there is no double-counting of single stocks in different indexes.)

    This post was published at Zero Hedge on Dec 6, 2017.


  • Beware Of Fake Expectations

    When you read the title of this article, I am sure you assumed this article would be all about the latest event of fake news which supposedly rocked the market this past Friday. Well, I am sorry to disappoint you.
    You see, many investors have been following fake news for much longer than you realize. Well, more accurately, the news has been real, but the expectations held by analysts and investors has been fake.
    As I have been presenting for quite some time now, we have seen many expectations of negative reactions to news being presented by analysts over the last two years. They have pointed to news events like Brexit, Frexit, terrorist attacks, rise in interest rates, cessation of QE, the Trump election, and many other reasons as to why the stock market will start heading south in a big way. So, while they have all pointed to real news events, their expectations have been fake.
    So, maybe its time to consider that fake news and fake expectations have potentially been hurting investors these last few years!?
    And, rather than maintaining fake expectations about how the next news event is going to ’cause’ a move in the market, at some point, investors may have to accept that the substance of these news events do not cause anything. Rather, it is the investor reaction to the news events which cause movements in the market. And, investor reactions are driven by investor sentiment.
    When investor sentiment is positive, seemingly negative news events are discounted (terrorist attacks, North Korea, rising interest rates, cessation of QE, etc.) as the market continues on its northern trajectory. However, as the market completes its natural path of progression, we reach a point at which it is time we can begin to expect that investor sentiment has reached a pinnacle, and will likely turn south for a time.

    This post was published at GoldSeek on Wednesday, 6 December 2017.


  • This Time Is Different, It Just Ends The Same

    This past weekend, I was in Florida with Chris Martenson and Nomi Prins discussing the current backdrop of the markets, economic cycles, and future outcomes. A bulk of the conversations centered around the current ‘everything bubble’ that currently exists globally. Elevated valuations in stock prices, extremely low yields between in ‘junk bonds,’ or intense speculation around ‘cryptocurrencies’ all suggest we have entered once again into ‘bubble’ territory.’
    Let me state this:
    ‘Market bubbles have NOTHING to do with valuations or fundamentals.’
    Hold on…don’t start screaming ‘heretic’ and building gallows just yet. Let me explain.
    Stock market bubbles are driven by speculation, greed, and emotional biases – therefore valuations and fundamentals are simply a reflection of those emotions.
    In other words, bubbles can exist even at times when valuations and fundamentals might argue otherwise. Let me show you a very basic example of what I mean. The chart below is the long-term valuation of the S&P 500 going back to 1871.

    This post was published at Zero Hedge on Dec 4, 2017.


  • Stock Market 2018: The Tao vs. Central Banks

    The central banks claim omnipotent financial powers, and their comeuppance is overdue.
    I will be the first to admit that invoking the woo-woo of the Tao as the reason to expect a reversal of the stock market in 2018 smacks of Bearish desperation. With everything coming up roses in much of the global economy, there is precious little foundation for calling a tumultuous end to the global Bull Market other than variations of nothing lasts forever.
    Invoking the Tao specifically calls for extremes to return or reverse to the opposite polarity: this is expressed in the line from Lao Tzu, The way of the Tao is reversal or Reversal is the movement of Tao.
    In other words, extremes of bullishness lead to extremes of bearishness, just as the extremes of bearishness in March 2009 (S&P 500 at 667) led to the current extremes of bullishness (S&P 500 2,600).

    This post was published at Charles Hugh Smith on SUNDAY, DECEMBER 03, 2017.


  • ABC NEWS SUSPENDS BRIAN ROSS AFTER ON-AIR FAKE NEWS REPORT ABOUT MICHAEL FLYNN THAT CAUSED STOCK MARKET PANIC

    In a stunning admission of guilt, ABC news announced Saturday that it was suspending investigative reporter Brian Ross for four weeks after he aired a fake news report about embattled former national security adviser Michael Flynn that caused a sharp sell-off in the stock market and was spread like wildfire by liberal journalists throughout the media who were desperate to believe the disinformation.
    ‘We deeply regret and apologize for the serious error we made yesterday. The reporting conveyed by Brian Ross during the special report had not been fully vetted through our editorial standards process,’ ABC claimed in a statement released to the media.
    ‘As a result of our continued reporting over the next several hours ultimately we determined the information was wrong and we corrected the mistake on air and online.’

    This post was published at The Daily Sheeple on DECEMBER 2, 2017.