Displaying items by tag: bear market

(New York)

Wall street bulls are becoming an endangered species, or so says the Financial Times. In a worrying sign for stocks, investors are increasing their cash balances, a move that supports the flood of bearish outlooks out there right now. Most analysts have a fairly pessimistic view of the market, with many calling for a recession and market downturn by the end of 2020. Precious few have bullish views, leaving Krishna Memani, CIO of OppenheimerFunds, in a unique spot in that he thinks we are in the middle of a 20-year bull market.

FINSUM: Most everyone has gotten very bearish in their medium term outlooks. Counter indicator?

(New York)

New payroll data has just been released and it is not saying anything positive about the underlying economy. According to ADP payroll figures, the US economy created 183,000 jobs in February, under estimates of 190,000 and well below the total of 300,000 in January. According to Moody’s analytics, “The economy has throttled back and so too has job growth”. The slowdown is most acute in the retail and travel industries and at smaller companies.

FINSUM: This is a pretty sharp pullback from January. The total number is still positive, but it will be interesting to see if this becomes a trend.

(New York)

One of the big outcomes of the huge rout to end last year was that stock pickers had reportedly gone back to doing what they did best—picking individual stocks based on fundamental value, signaling a diversity of holdings. However, in aggregate, that view appears to be hogwash, as new data shows that institutional equity ownership in stocks is at its highest point in years. Goldman Sachs follows this data and tracks how many companies are among the 50 most owned by hedge funds and mutual funds alike. Right now it is 13, which is the highest level since 2017. Industrial and tech stocks were the most held.

FINSUM: The most concentrated stock holdings are, the more risk there is for steep falls in those names.

(New York)

Here is an eye-opener—all the carnage of December is almost in the rearview mirror for the Nasdaq. The index has just about risen out of its bear market, up 20% from its lows. That is an amazing turnaround from its nadir on December 24th. The index is heavily weighted towards big tech shares and has recently rallied on the back of optimism about improving US-China trade relations and a more dovish Fed.

FINSUM: We like good news, but the rally in the Nasdaq feels like too much too soon!

(New York)

A lot of investors are nervous to put their money back in markets. The big losses of December have given way to a great start to the year, but investors are still shy because of the volatility. Well, JP Morgan says investors need to get back in markets soon as waiting for analysts to turn bullish again has a history of being a poor idea. Generally speaking, analysts can be a year behind actual market moves, so if investors wait until the mood improves, they will have already missed out on a lot of the gains.

FINSUM: Worries about forthcoming earnings aside, the market definitely has a renewed spring in its step and we are generally feeling bullish given the now lower valuations.