Posts Tagged ‘Clarity and Valuation’

‘Overvalued, Check. Overbought, Check. Overbullish, Check….’

‘Overvalued, Check. Overbought, Check. Overbullish, Check….’

Courtesy of Michael Panzner at Financial Armageddon, and John Hussman

German Stock Exchange Opens After Wall Street Crash

I’ve written a fair number of posts highlighting the disconnect between Wall Street and Main Street (far more than I can remember, in fact). But even if you ignore what is happening in the real economy (you know, like Wall Street usually does), share prices are out of whack — with their own history. In "Clarity and Valuation," John P. Hussman, President of Hussman Investment Trust, discusses that very issue in this week’s edition of Hussman Funds’ Weekly Market Comment:

Last week, the dividend yield on the S&P 500 dropped below 2%, versus a historical average closer to double that level. While part of the reason for the paucity of yield in the current market can be explained by the 20% plunge in dividend payouts over the past year, as financial companies have cut or halted dividends to conserve cash, the fact is that current payouts are not at all out of line with their historical relationship to revenues, and even a full recovery of the past year’s dividend cuts would still leave the yield at a paltry 2.5%. The October 1987 crash occurred from a yield of 2.65%, which was, at the time, the lowest yield observed in history, matched only by the 1972 peak prior to the brutal 1973-74 bear market.

Those two periods had a few other things in common. In the weeks immediately preceding the market downturn, stocks were overbought, had advanced significantly over prior weeks, bond yields were creeping higher, and investment advisory bearishness had dropped below 19%. All of those features should be familiar, because we observed them at the 1987 and 1972 peaks, and we observe them now.

On the basis of normalized profit margins, the average price/earnings ratio for the S&P 500, prior to 1995, was only about 13. Higher historical “norms” reflect the addition into that average of extremely high “recession P/Es,” based on dividing the S&P 500 by extremely low, but temporarily depressed earnings. For example, the P/E for the S&P 500 currently is 86, because earnings have been devastated, but it would be foolish to take that figure at face value, and equally foolish to work it into a historical “average” P/E. The pre-1995 norm


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Chart School

March Trade Deficit Down 6.5B from Revised February

Courtesy of Doug Short's Advisor Perspectives.

The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 1992. The monthly reports include revisions that go back several months. This report details U.S. exports and imports of goods and services.

The Bretton Woods agreement, which established a stable foreign currency exchange system collapsed in 1971 and as a result, currency values began to float freely and the US dollar was no longer tied to gold values. Since 1976, the United States has had an annual negative trade deficit. The International Monetary Fund and the International Bank for Reconstr...



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Zero Hedge

"Bankers Will Choose To Fly Instead Of Die" - Why Bill Gross Thinks Helicopter Money Is Imminent

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

By Bill Gross Of Janus Capital

Culture Clash

A respected reporter recently asked me what were a few important things I had learned from all this and all of that during the past decade and I surprised myself and perhaps him by answering that I now realized that younger generations &#...



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Phil's Favorites

China Warns Economists, Analysts, Reporters About "Overly bearish" Remarks

Courtesy of Mish.

I remain in “awe” of China-loving proponents who believe the Yuan will soon supplant the US dollar as the world’s reserve currency on the way to becoming the world’s top economic power.

By soon I mean a “decade” or less. It’s not going to happen.

Centrally planned bogus economies, with tiny illiquid bond markets, huge capital controls, pegged currencies, and no freedom of speech are no way suitable for such lofty expectations.

One can make such comments here, in China, you are in trouble.

Please consider China Presses Economists to Brighten Their Outlooks.

...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Seven big banks settle U.S. rate-rigging lawsuit for $324 million (Reuters)

Seven of the world's biggest banks have agreed to pay $324 million to settle a private U.S. lawsuit accusing them of rigging an interest rate benchmark used in the $553 trillion derivatives market.

Here's What Usually Happens to Stocks in Years Like 2016 (Bloomberg)

Despite the huge comeback in the S&P 500, investors remain skeptical of...



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ValueWalk

2016 Sohn Conference: Schreiber, Robbins, Einhorn, Druckenmiller, And More [LIVE]

By Jacob Wolinsky. Originally published at ValueWalk.

The 2016 Sohn Conference starts on Wednesday (May 4th) at David Geffen Hall, Lincoln Center 10 Lincoln Center Plaza New York City. As is our custom at ValueWalk we will be providing in-depth coverage of the most anticipated event of the year. The line up this year once again does not disappoint.

Note – we will post all links to our coverage on this page so just bookmark it or sign up for our free newsletter– also we will post the schedule once it is up

Sohn Investment Conference 12:00PM – 5:30PM

Here are the speakers

  • Larry Robbins, Glenview capital
  • David Einhorn, Greenlight Capital
  • Zach Schreiber, Poinstate Capital
  • ...


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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Kimble Charting Solutions

DAX Index (Germany) - Leading indicator pulling S&P down with it?

Courtesy of Chris Kimble.

Over the past 12-15 months, the majority of global stock markets have been in a down trend, creating a series of lower highs and lower lows. The German Stock market peaked around 6-weeks ahead of the S&P 500 last year and could be considered a global trend leader, creating a domino effect.

Below updates the pattern in the DAX index-

CLICK ON CHART TO ENLARGE

The DAX index remains inside of long-term rising channel (A), no doubt ...



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Digital Currencies

Is Craig Wright The Creator Of Bitcoin? Frisby and Matonis On 'Satoshi Nakamoto'

Courtesy of ZeroHedge. View original post here.

Is Craig Wright The Creator Of Bitcoin? Frisby and Matonis On ‘Satoshi Nakamoto’

By Mark O'Byrnewww.GoldCore.com 

Craig Wright, an Australian computer scientist, self-declared cyber security expert and entrepreneur, has claimed to be the creator of Bitcoin, the elusive &l...



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OpTrader

Swing trading portfolio - week of May 2nd, 2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Biotech

PRGO, VRX and an Overpriced Papa

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

By Ilene 

Remember this? It was Monday. PRGO is down from around $130 to under $100 since I started following it LAST WEEK. That's down almost 25% in a week, and almost 50% in the last year. So I wrote, 

"Perrigo CEO Joseph Papa leaves Perrigo (PRGO) to lead Valeant (VRX) while PRGO issues a warning about missing earnings expectations. Not surprisingly, PRGO stock plummeted today. 

Robert Ingram, Chairman of the [Valeant] Board, stated, "The Board has conducted a thorough search process and believes that Joe is the ideal leader for Valeant at this time. He has a strong shareholder orientation,...



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Mapping The Market

About that debate last night

Although we try to stay focused on finding and managing promising trade ideas, the comments in the comment section sometimes take a political turn (for access, try PSW — click here!). So today, Jean Luc writes,

The GOP debate last night was just unreal – are these people running to be president of the US or to lead a college fraternity! Comparing tool size? The only guy that looks semi-sane is Kasich. The other guys are just like 3 jackals right now. 

And something else – if Trump is the candidate, that little Romney speech yesterday is probably already being made into a commercial. And all these little snippets from the debate will also make some nice ads! If you are a conservative, you have to be scared now. 

Phil writes back,

I was expecting them to start throwing poop at each other &n...



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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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