Analysis Topic: Stock & Financial Markets
The analysis published under this topic are as follows.
Sunday, October 16, 2022
Why Most Stocks May Go Nowhere for the Next 10 Years! / Stock-Markets / Stock Market 2022
By: Nadeem_Walayat
Here's why PE ratio's matter as the following chart shows the return 10 years forward from the starting average PE i.e if the stock market is trading on an average PE of 27 than can basically be expected to go nowhere for the next 10 years. Whilst the lower the PE the higher the expected return (on average), where the safe zone for investing is at a starting PE of between 10 and 20. Note graphs is as of September 2021, see below for updated ratios.
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Sunday, October 16, 2022
Post-bubble Economic Contraction / Stock-Markets / Financial Markets 2022
By: Gary_Tanashian
“Post-bubble contraction” (PBC) as coined by Bob Hoye, may finally be at hand
Bob Hoye has been talking about a coming post-bubble contraction (PBC) for many years, in my experience. Now after many false starts, it may finally be in play on the wider macro picture. Past contractions (e.g. 2008 and 2020) have proven to be little more than precursors, triggers to new asset bubble phases because the Fed’s main macro manipulation tool, bonds, were in a multi-decade long trend of disinflationary signaling.
To this point with respect to the PBC, timing has been an issue. This is not a critique of Hoye, a fine financial historian and macro fundamental analyst. In fact, it is the opposite. It is from him that I learned the proper fundamentals for gold and especially the gold mining industry. But perfectly good deflationary meltdowns (of previous inflationary operations) were foiled in both 2008 and 2020.
Why were they foiled so effectively? Because the Federal Reserve and global central banks have for decades had a lenient bond market to fall back on (the fabled ‘bond vigilantes of yore apparently rode into a small town, hit the saloon and never again emerged… until 2022, that is). I have for many years now used the 30-year yield ‘Continuum’ (monthly 30yr yield chart, below) as a nice visual to the mechanics of the Fed’s macro-manipulative wheel house, the US Treasury bond market.
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Saturday, October 15, 2022
Feeding the Stocks Bear Market Beast / Stock-Markets / Investing 2022
By: Nadeem_Walayat
For some reason most folk when looking at the charts focus on the high vs the low as if investors only buy and sell at the exact highs and lows, well maybe the mania herd bought near the highs last year to sell near the lows this year but most intelligent investors don't invest that way i.e. during the second half of last year, I sold down 80% of my AI tech stocks portfolio in advance of this bear market, including warning virtually within a few percent of the high to get ready for a bear market during 2022 and maybe even worse a crash! That was on the 5th of December 2021!
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Saturday, October 15, 2022
New Banking Crisis Looms as Fears of “Lehman Moment” Rise / Stock-Markets / Financial Crisis 2022
By: MoneyMetals
As new inflation data pushes the Fed toward continuing with rate hikes, precious metals markets are struggling to make headway.
On Thursday, the government released Consumer Price Index data for September. The so-called core CPI, which excludes food and energy, increased 6.6% from a year ago. That’s the highest core inflation reading since 1982.
Although prices at the pump have eased since the summer peak, other inflation components continue to rise. Housing, food, and medical care are currently among the biggest contributors to rising consumer prices.
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Wednesday, October 12, 2022
Why Most Stocks May Go Nowhere for the Next 10 Years! / Stock-Markets / Stock Market 2022
By: Nadeem_Walayat
Here's why PE ratio's matter as the following chart shows the return 10 years forward from the starting average PE i.e if the stock market is trading on an average PE of 27 than can basically be expected to go nowhere for the next 10 years. Whilst the lower the PE the higher the expected return (on average), where the safe zone for investing is at a starting PE of between 10 and 20. Note graphs is as of September 2021, see below for updated ratios.
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Monday, October 10, 2022
Stock Market Trend Current State of Play / Stock-Markets / Stock Market 2022
By: Nadeem_Walayat
S&P closed at 3680. trading to a low of 3633, June's low is 3622, so the 50% retracement studies conclusion so far remains in tact which implies that this decline is a bear trap, to be clear a trap for the bears all betting on a collapse into the abyss of 3,200 and below, fantasy numbers such as 3000 area being bandied around, and apparently Monday 26th is the end of the SHIEMITA when a big CRASH is due!, Note I don't for a minute take this nonsense seriously, anyway today's the last day of the SHEIMTA that was ironically brought to my attention in June near the bear market lows when there were shrill cries of SELL EVERYTHING NOW! In which case the Shemita folk are looking to break even today (in US dollars). To be clear SHIMTA is BS, but like all BS's there will be coincidences which with the benefit of hindsight will be twisted and turned into support of BS as will probably happen to this SHEIMITA where what it originally implied will be subverted with the benefit of hindsight, that's the case with religious mumbo jumbo, people actually do want to believe in the super natural! That ancient religious texts somehow have magic powers to predict what the stock market will do in 2022 which can only happen via a self fulfilling prophecy, i.e. if enough believe in it and act on it then yes it sort of comes true, which in fact is the basis of Technical Analysis, traders and algo's lock step acting on wiggly lines on the charts. A quick google shows that most of the major market CRASH events happened AFTER SHEMITA but for some reason SHEMITA claims jurisdiction over them as well i.e. 1987 Crash, 9-11 attack and so on,
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Thursday, October 06, 2022
Jerome Powell's TRANSITORY DIP in INFLATION, AI and High Risk Stocks Updated Buying Levels / Stock-Markets / Investing 2022
By: Nadeem_Walayat
INFLATION! INFLATION! INFLATION!
The big questions for the US and how our US tech stocks will fair over the coming year are -
1. Does the Federal Reserve finally understand just how dangerous inflation actually is ?
2. If it does then how is it going to subvert the inflationary policies of the White house, does not matter which clown is in office i.e. democrat or republican, BOTH have tendencies towards rampant money printing given the 4 year election cycle.
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Sunday, October 02, 2022
Answering the Question - Has the Stocks Bear Market Bottomed? Apple Nut About Crack? / Stock-Markets / Stock Market 2022
By: Nadeem_Walayat
Dear Reader
Has the BEAR market Bottomed? That is the question I am most often asked for the duration of this bear market, where my earlier responses were that my focus was on accumulating target stocks as they DEVIIATE FROM THEIR HIGHS TO NEW LOWS, so where the indices actually bottom is largely irrelevant. Still this is the most asked question so following the June bottom my stance changed to the bottom is probably in for most target stocks, though I cannot say the same for the indices. However in the run up to 4180 I had penciled in a subsequent bear swing target of between 3720 to 3920 for a probable higher low, which means that June was probably the bottom. This weeks price action further strongly suggests that the BOTTOM IS IN as I voiced in the comments section of my last article where for me the key indication was the breakout above 4200, it was not an intraday move or a few shallow spikes above 4200, Instead the S&P rocketed higher by over 110 points in a 3 day run from 4200 to 4317 that acted as a strong indicator that 3637 was THE BOTTOM, and thus all we can now seek is a correction of a fraction of the rally off the bottom for a 2nd bite at the AI stocks investing cherries.
However, the bottom is in is also based on my past studies that suggest a 50% reversal from the bear market lows usually act as a strong indication of the bottom being in which is the focus of this analysis that acts as a further excerpt from my forthcoming in-depth analysis that I have hit the pause button on for 1 week as I venture out of my castle for the first time in 6 months to travel to Wales for some sun, sea and sand and perhaps see if I can find Excalibur in one of it's many lakes that follows the slow recovery form my March ruptured Achilles tendon injury that revealed the extent to which the NHS is a JOKE Health Service when one actually has the misfortune to use it.
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Saturday, October 01, 2022
Fed QT2 Imperils Stock Markets / Stock-Markets / Stock Market 2022
By: Zeal_LLC
The Fed’s second quantitative-tightening campaign already ramped up to full-speed in September, with dire market implications. The unprecedented scale of QT2’s monetary destruction dwarfs QT1’s, which crushed stock markets. With inflation raging out of control because of the Fed’s extreme quantitative-easing money printing, it has no choice but to run aggressive QT even though that imperils overvalued stocks.
Like many serious economic problems today, the Fed’s intractable money-supply-inflation mess was born in March 2020’s pandemic-lockdown stock panic. In just over a single month, the flagship S&P 500 stock index plummeted an apocalyptic 33.9%! Traders were terrified government-imposed lockdowns to fight the new COVID-19 virus would force a severe recession or full-blown depression, so they ran for the hills.
Fed officials joined in that panicking, deeply worried that the negative wealth effect from cratering stocks would crush consumer spending and thus the US economy. So the Federal Open Market Committee rushed to intervene, making two emergency inter-meeting federal-funds-rate cuts of 50 basis points and 100bp! But with the latter slamming the FFR back down to zero, the Fed was out of rate-cut ammunition.
So these elite central bankers making monetary policy decided to radically expand their already-underway fourth QE campaign. QE4 had been born about five months earlier in mid-October 2019, adding $275b to the Fed’s balance sheet in that span. At that same Sunday-evening meeting where the FOMC slashed its FFR 100bp, it pledged to monetize “at least” $500b in US Treasuries and $200b in mortgage-backed bonds.
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Wednesday, September 28, 2022
STOCKS BEAR MARKET DISCOUNTING EVENT BIG PICTURE / Stock-Markets / Stock Market 2022
By: Nadeem_Walayat
As my recent excerpt from my forthcoming mega-piece on the stock market illustrated, there is a 80% probability that the bear market has bottomed and so far it has not done anything to negate this probability. Therefore it looks like we are coming out of our 6th MAJOR discounting event since the BIG Financial Armageddon BAD BEAR MARKET bottomed in March 2009.
Zoom out of hourly and daily charts and see the true magnitude of the 2022 bear market that has so many worried of much worse to come.MSM coverage of the financial markets is akin to a fly buzzing around that needs swatting!
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Wednesday, September 28, 2022
How to Profit During a Bear Market - Portfolio Account / Stock-Markets / Investing 2022
By: Nadeem_Walayat
Back in early April I opened an IKBR ISA with £20k (ISA limit) that I proceeded to quickly populate with target stocks as they traded down to new bear market lows. ISA's limit what one can do, i.e. NO SHORTING, Options and no access to most ETF's due to HMRC rules, another restriction is one cannot hold US Dollars, every buy and sell has to be converted into and out of US dollars, so ISA's are definitely geared towards longer term investors. Anyway the IKBR ISA acts as a good real world proxy for how my public portfolio should perform if one followed my analysis, where the primary goal is to accumulate during this temporary bear market to capitalise on during the subsequent bull market, my expectations from the outset were that there WILL BE DRAWDOWNS because stock prices FALL during bear markets so as to result in the buying opportunities, stocks getting cheaper during a bear market is a good thing! Cheaper in terms of their valuations for if a stock price falls and the stock gets more expensive in valuation terms then that is NOT a good thing!
Current state of the IKBR ISA is up 12% since inception (Early April 2022) through following my analysis of buying target stocks when they trade down to NEW LOWS and then trimming lightly on the subsequent rallies, cash now comprises about 33% of this portfolio up from about 3% near the lows, as IKBR does not charge a rip off f/x fee as many brokers, for comparison FreeTrade charges 0.45%, AJ Bell 1% and Interactive Investor charge 1.5%, what are they smoking! AJ Bell recently cut their f/x fee to 0.75% but their platform is a pain in the butt to use for US stocks i.e. NO LIMIT ORDERS!
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Monday, September 26, 2022
S&P June Stock Market Lows - To Break or Not to Break? / Stock-Markets / Stock Market 2022
By: Nadeem_Walayat
Stock Market - To break the June Low or not to break the June low, that is the question?
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Saturday, September 24, 2022
Stock Market BULL Trap SET! / Stock-Markets / Stock Market 2022
By: Nadeem_Walayat
Stock Market FOMO's to 4280 Friday close ending at the high of the day! Short covering rally triggered by CPLIE of 8.5% down from 9.1% for June, all blind to the reality of what Inflation above 4% let alone above 8% actually means for the US economy and how it impacts the every day lives of ordinary americans that are destined for greater pain with each passing month even if CPLIE nose dives to under 4% which will make NO difference in terms of the Inflation pain that I suspect will run for the whole of this decade as the 10 year inflation graph warns of what looks set to come to pass. It's not rocket science, it's the consequences of over $9 trillion of QE, and $35 trillion of total GLOBAL money printing QE, the only way it won't show up in the inflation indices is if they systematically exclude everything that goes up in price, perhaps only leaving the ball point pen that Jerome Powell fidgets with at every Fed meeting.
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Friday, September 23, 2022
Economic Conditions, Market Performance Worsen after Fed Rate Hike / Stock-Markets / Financial Markets 2022
By: MoneyMetals
Precious metals markets are trying to tough this week despite another large rate hike by the Federal Reserve.
On Wednesday, the Fed raised its benchmark interest rate by three quarters as expected. Fed chairman Jerome Powell vowed to bring inflation down and restore price stability.
Jerome Powell: My colleagues and I are strongly committed to bringing inflation back down to our 2% goal. We have both the tools we need and the resolve that it will take to restore price stability on behalf of American families and businesses. Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy. Without price stability, the economy does not work for anyone. We are moving our policy stance purposefully to a level that will be sufficiently restrictive to return inflation to 2%. The longer the current bout of high inflation continues the greater the chance that expectations of higher inflation will become entrenched.
After pursuing ultra-loose monetary policy that fomented price instability and massive inflation in the first place, Powell seems to now want to model himself after former Fed chairman Paul Volcker. In the early 1980s, Volcker jacked up interest rates to the highest on record to finally curtail the inflation surge from the late 1970s.
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Friday, September 23, 2022
Why You Should Be Leery of the Stocks Bond 60 / 40 Portfolio / Stock-Markets / Stock Market 2022
By: EWI
"The tidal wave of risk assumption … may be turning"
Many investors allocate a percentage of their portfolios to bonds to cushion against a drop in the stock market.
A popular allocation is a 60 / 40 mix of stocks and bonds.
However, this hasn't worked out recently. Here's a Yahoo! Finance headline (Sept. 6):
The 60/40 strategy is on pace for its worst year since 1936: BofA
The mix of 60% stocks and 40% bonds was down 19.4% from the start of the year through the end of August, according to Bank of America Global Research.
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Thursday, September 22, 2022
Stock Market Smashing Fed Day / Stock-Markets / Stock Market 2022
By: Monica_Kingsley
S&P 500 turned decisively lower, with only a very brief spike that got reversed within an hour. No room for bullish misinterpretation, Powell didn‘t say really anything that could feed buy the dip sentiment – he delivered. Treasuries are getting accustomed to the soft landing not turning out so soft in the future actually – yields at the long end of the curve have finally turned down while Fed tightening keeps being reflected on the short end, and junk bonds are suffering.
In all the risk-off, the dollar was unable to hold on to sharp gains both yesterday and today, and together with the crypto premarket upswing and real asset resiliency, this points to a reprieve in paper asset selling later this week. SPX 3,825 is the key level to watch today. I like the message commodities and precious metals are sending here – once it gets accompanied by miners and oil sector stocks, things would get brighter, but we are not there yet. Suffice to say that sharp downside is being decisively rejected.
Wednesday, September 21, 2022
STOCKS BEAR MARKETS ARE SUPPOSED TO BE PAINFUL! / Stock-Markets / Stocks Bear Market
By: Nadeem_Walayat
The bottom line is that bear markets are supposed to be PAINFUL! And I can tell many investors feel that PAIN from the comments as they post the latest price of say Intel or AMD or TSMC or any other stock trading lower as if I have a magic button to press to make the stock go higher. So if you are feeling PAIN then go read my earlier recent articles on the psychology of investing in bear markets because bear markets are PAINFUL where the degree of pain experienced depends on what time frame on is focused upon.
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Tuesday, September 20, 2022
Stocks Bear Market Accumulation Strategy / Stock-Markets / Investing 2022
By: Nadeem_Walayat
My strategy for this bear market from the outset has been be to accumulate during a volatile trend to a probable Dow target of 29k to 30k where I settled on my best guess of 29.6k, by late August. In the course of which I was expecting volatile swings of between 15% to 30% in either direction that would allow me to BUY big during the DIPs and then SELL a portion of what I bought during the bear market rallies, as well as selective shorting. Unfortunately this bear market has tuned out to be LESS volatile than what I was expecting i.e. swings higher of 9% are just not enough for any significant trimming of positions as the table illustrates.
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Friday, September 16, 2022
Dow Stock Market Elliott Wave Trend Forecast / Stock-Markets / Stock Market 2022
By: Nadeem_Walayat
Despite being skeptical of Elliott wave theory and not abiding by any of it's tenants, i.e. I number the counts as I see them regardless of following the 'rules'. Nevertheless Elliott wave proved a useful tool during 2021 in the count down to the end of the Stocks bull market and the start of this bear market as the charts illustrate that there are times when EW BS actually works!
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Thursday, September 15, 2022
Stock Market Elliott Wave Analysis and Trend Forecast Sept to Dec 2022 / Stock-Markets / Stock Market 2022
By: Nadeem_Walayat
Despite being skeptical of Elliott wave theory and not abiding by any of it's tenants, i.e. I number the counts as I see them regardless of following the 'rules'. Nevertheless Elliott wave proved a useful tool during 2021 in the count down to the end of the Stocks bull market and the start of this bear market as the charts illustrate that there are times when EW BS actually works!
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