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Morgan Stanley is warning investors to be careful when picking stocks next year because paying too much for over-hyped growth names could be disastrous.
Mike Wilson, chief U.S. equity strategist at the firm, sees an “earnings recession” at some point in 2019, predicting “two quarters of negative year-over-year growth.” Read More.
Jeffrey Gundlach, chief executive officer of DoubleLine Capital, says the U.S. Treasury yield curve inversion on short end maturities are signaling that the “economy is poised to weaken.”
Gundlach, known on Wall Street as the Bond King, said the Treasury yield curve from two- to five-year maturities is suggesting “total bond market disbelief in the Federal Reserve’s prior plans to raise rates through 2019.” Read More.
Some of Wall Street’s top economists think it is still unlikely that both the U.S. and China find a permanent compromise despite the cease-fire.
Wall Street traders may be exuberant Monday over the decision to pause the trade war between the U.S. and China, but economists across the marketplace aren’t convinced the delay will lead to a permanent solution. Read More.
Having shrugged off a collapsing Put-Call ratio as anything but a buying opportunity, and after “quadrupling-down” on his bullish take for risk assets – one which has so far failed to materialize and even following today’s latest short squeeze, the S&P remains flat on the year – JPMorgan’s quant MD Marko Kolanovic just came clean about some of the real risks in markets. Read More.
Prominent short seller Jim Chanos says he’s concerned about the fragility of the stock market in response to increases in interest rates. “One of the things that worries me is just how fragile we seem to be to small rises in interest rates,” Chanos told CNBC’s Sarah Eisen. Read More.
The venerable Bank for International Settlements in Basel is the lair of the central banking fraternity, and the high priest of orthodoxy.
The pillars of the global financial system are fundamentally unstable and could lead to a frightening chain-reaction in the next crisis, the world’s top watchdog has warned. Read More.
The US economic cycle is six months from becoming the longest on record, which has led investors to question when it may end.
Nomura has compiled a list of 19 financial metrics which “nearly all suggest we are closer to the end of a cycle”. However, while US economic growth will slow next year, the analysts said the current expansion should still have further to run. Read More.
Fed Chairman Jerome Powell readied the sleigh for a Santa rally in the markets with his dovish comments Wednesday. But a trade deal out of Friday’s dinner meeting between President Trump and Chinese President Xi Jingping is needed to keep up the momentum.
Unfortunately, some investors don’t see an agreement on the menu at that Buenos Aires meeting. Read More.
The Federal Reserve issued a cautionary note Wednesday about risks to financial stability, saying trade tensions, geopolitical uncertainty and a buildup in corporate debt among firms with weak balance sheets pose strong threats.
In a lengthy report on the banking system and corporate and business debt, the Fed warned of “generally elevated” asset prices that “appear high relative to their historical ranges.” Read More.
‘Talk about classic bear-market behavior. We crater all week and then we open up huge on nothing, but because we are so oversold it is hard to let things go.’ Are we in bear market or something more benign?
That’s the crucial question bedeviling a number of investors, including CNBC personality Jim Cramer, lately. In a Monday tweet, Cramer appeared to suggest that if the current dynamic walks like a duck and talks like a duck … then it’s bear. In other words, if the characteristics of a bear market are on display then the market should consider that one may be at hand. Read More.
What goes up, must come down.
Over recent years, there hasn’t been a safer bet than big tech – specifically the FAANG stocks, which include Facebook, Apple, Amazon, Netflix, and Google’s parent company Alphabet. But in the financial world, this feeling of euphoria can be turned upside-down very quickly. Read More.
The decoupling is over for the US economy and its stock market according to Morgan Stanley which has long held a bearish outlook on the US, but overnight officially downgraded US stocks to “sell”, expecting the S&P to end 2019 at 2,750, while double upgrading emerging market to overweight. Read More.
Nine turbulent weeks and a correction in U.S. stocks have left analysts with a thorny question. What’s the market saying about the economy?
And while few see incontrovertible signs investors are bracing for a recession, it’s a word that’s been coming up more as they seek a signal in the chaos. Read More.
Two years after British billionaire Crispin Odey decided it was time to not only “fight the Fed” but launched a brutal and bloody crusade against central banks around the world, in which he bet virtually everything on a “violent unwind” of the QE bubble, loading up on gold and shorting every government bond he could find, something strange is happening: Odey appears to be winning. Read More.
Unemployment is near lows not seen in half a century. The American economy is set for its best year since 2005. Large corporations are producing giant profits. Even wages are starting to rise. And the stock markets are a mess. Read More.
Clarity Financial Chief Investment Strategist Lance Roberts reviews Tuesday’s (11/20) pre-Thanksgiving market performance…and it’s not pretty.
The Dow plunge isn’t anywhere near done. At least, not according to chief financial officers at major corporations.
More than half of the members of the CNBC Global CFO Council think the Dow Jones Industrial Average will fall below 23,000 — roughly 2,000 points from its current level — before the stock market barometer is ever able to top the 27,000 level. Read More.
One of Wall Street’s most famous proverbs of this bull market is backfiring. “Buy the dip,” or picking up a stock or the whole market when they sell off, isn’t working for the first time in 16 years, according to analysis from Morgan Stanley. The investment bank looked at the average return for the S&P 500 if the previous week was negative and found that this year, there was no rebound. Read More.
Late in January, just as the market was enjoying an unprecedented melt-up ahead of the February VIXplosion which sent the S&P on its first of two corrections in 2018, Bank of America published a warning report, titled “Our Sell Signal Was Triggered On Jan 30, S&P 2686 Is Next” in which chief investment strategist Michael Hartnett explained why he was convinced that a drop as much as 12% was imminent in the coming weeks. He was spot on, with the S&P tumbling within days, hitting hit target and then some. Read More.
Several months ago, I penned an article about the problems with “passive indexing” and specifically the problem of the “algorithms” that are driving roughly 80% of the trading in the markets. To wit:
“When the ‘robot trading algorithms’ begin to reverse (selling rallies rather than buying dips), it will not be a slow and methodical process, but rather a stampede with little regard to price, valuation, or fundamental measures as the exit will become very narrow.” Read More.
After two significant corrections during 2018, this has to be the beginning of a “bear market,” right?
It certainly is possible given the headwinds that are starting to weigh on corporate outlooks such as ongoing trade wars, weaker revenue growth, a strong dollar, and higher interest rates. However, despite these concerns, there are three things which suggest the necessary psychological change for a more meaningful “mean reverting” event has yet to occur. Read More.
WASHINGTON—A data warehouse created to track all U.S. stock and options orders is expected to launch on Thursday with less functionality than previously anticipated including limits on how many users can search it, according to people familiar with the matter.
The Securities and Exchange Commission ordered the creation of the Consolidated Audit Trail in 2012 after regulators found they didn’t have enough information to explain a sudden market decline, known as the “flash crash,” that occurred in May 2010. One SEC commissioner, Kara Stein, has said the database could become the “Hubble telescope of securities markets.” Read More.
The signals are clear. The warning shots have been fired. Equity markets across the globe have lost trillions as investors increasingly worry about the two-punch strike of slowing economic growth and rising interest rates. Read More.
Very Negative Technical Action
We had another roller coaster ride in the stock market today, with the Dow Jones ending down about 200 points, but that was well off the lows of the day. I think we were down about 350 points, or close to it, at the lows. But, more interesting, we were up over 200 points earlier this morning. So this is very negative technical action, when you have these rallies and then close negative. Read More.
Around three years ago, in September 2015, I wrote an article titled ‘The Real Reasons Why The Fed Will Hike Interest Rates‘ in which I predicted that the Federal Reserve, in the face of criticism, would soon pursue a program of interest rate hikes into economic weakness. I argued that this plan would be somewhat similar to what the Fed did in the early 1930’s; an action that prolonged the Great Depression for many more years. So far, my prediction has proven to be correct. Read More.