Displaying items by tag: bull market

Thursday, 20 September 2018 07:39

BAML Warns the End of the Bull Market Has Arrived

(New York)

The market has been doing very well lately. Political worries, trade wars, it doesn’t matter, nothing seems to be able to contain the market’s optimism. Despite all this, though, Bank of America says it is all about to come to an end. The bank’s top strategist says that weakening growth, rising rates, and a glut of debt will conspire to weaken stocks. “The Fed is now in the midst of a tightening cycle, ignoring structural deflation, focusing on cyclical inflation … Until this Fed hiking cycle ends we suspect absolute returns from financial assets will remain slim & volatile”. BAML says that weakening bank stocks even in the face of rising rates (which should be good for them) may be a sign of how badly the Fed’s tightening will affect of the overall economy.


FINSUM: This is quite a gloomy and contrarian opinion. We see the argument, but it certainly seems to contradict everything one can observe in the market and economy right now.

Published in Eq: Large Cap
Friday, 14 September 2018 09:24

The Market Will Rise Much More Before Falling

(New York)

We run a lot of bearish stories in FINSUM, and with good reason—there are a lot of them out there and we feel the need to share those views with advisors and investors. However, when there is a credible bullish story, we jump at the chance to run it. Today we have one. Robert Shiller, perhaps the godfather of doom and gloom with his CAPE ratio, has just made an uncharacteristic statement: he says that stocks may rise much higher before eventually falling. The Nobel laureate says “The stock market could get a lot higher before it comes down … It’s highly priced, but it could get much more highly priced”. Shiller had previously been warning (last year) about how overpriced the market was. Shiller says the reinvigorated market has to do with President Trump’s pro-business drive.


FINSUM: It is interesting to hear someone as typically bearish as Shiller saying that stocks may rise a good deal more. Something to pay attention to.

Published in Eq: Large Cap
Wednesday, 22 August 2018 08:24

How to Manage Your Portfolio as Stocks Look Risky

(New York)

The markets look troubling right now. They are just about to cross to a new high at the same time as they have just breached the record for the longest ever bull market. P/e ratios are way above historical averages and stocks have risen 400%+ (including dividends) since their lows in 2009. At the same time, there are ample geopolitical headwinds, tightening rates, and trouble in tech. Is it time to take risk off the table? Maybe, but don’t act rashly. The key is to take small, gradual, and reversible steps. If you end up being right, you will have minimized your losses, but if you end up being wrong, you won’t kick yourself from missing gains.


FINSUM: Advisors say that these kinds of strategies are well-received by most investors, so simple risk mitigation efforts can go a long way to minimizing the psychological discomfort one feels at the potential peak of the market.

Published in Eq: Large Cap
Wednesday, 15 August 2018 08:54

Why the S&P 500 Will Surge to End the Year

(New York)

Stocks have done very well over the last month and a half. The correction—one of the longest on record—ended and stocks are back near an all-time high. But where do we go from here? One Wall Street analyst says the S&P 500 is in for major gains, with the index set to rise 12% before the end of the year. The analyst, from Cannacord Genuity, sees surging corporate earnings and rising consumer confidence as key to the market expansion. He sums up his view this way, saying “There is no doubt the unpredictable news backdrop of a potential trade war with China and a rise back to 3 percent in the 10-year U.S. Treasury yield can cause increased volatility, but the fundamental backdrop commands using it as an opportunity to add risk”.


FINSUM: The principal components of the argument seem sound, but we will admit we are a bit concerned about an earnings peak even though history tells us not to be.

Published in Eq: Large Cap
Monday, 16 July 2018 09:18

The Bond Bull Market Set to Return

(New York)

Anybody who is worried about a pending bond bear market might take some solace in recent news. Bond markets are becoming increasingly skeptical of the Fed’s bullish stance on the economy, and traders believe there won’t be nearly as many rate hikes as the Fed says. The US has just seen a weak inflation report, and a flattening of the yield curve, both at home and in the Eurodollar market, spells ill for the economy. So while the Fed says it will continue to hike rates into 2020, top market analysts are saying things like “The markets are telling us that there is a pretty high risk of economic slowdown or recession at the end of 2019” (Janney Capital Management).


FINSUM: We think the economy will definitely start to weaken before 2020. Perhaps we will not have a deep recession, but we definitely don’t think there will be continuous hikes for the next year and a half, which is good news for bonds.

Published in Bonds: Total Market
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