Few Called Market Turn, Fewer Predict It Will Last
by ilene - January 2nd, 2010 2:29 pm
H/t to Pragcap.
Few Called Market Turn, Fewer Predict It Will Last
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By AP / TIM PARADIS, courtesy of TIME
(NEW YORK) — Few analysts forecast this year’s remarkable stock market rebound as major indexes were plunging to 12-year lows last March. Now, with most experts predicting the pace of stocks’ gains will slow in 2010, there’s reason to believe they will be proven correct.
Stocks began the dramatic turnaround in March after Citigroup Inc. and other big banks said they were making money again, and then climbed at a fairly steady pace as signs of an economic recovery from the Great Recession became more pronounced.
Investor fears about a potential financial system collapse played a big role in the early year slump in stocks. Once it was clear that wasn’t going to happen, the Standard & Poor’s 500 index roared back 64.8 percent from its early March low, the biggest move since the Depression. For the full year, the index rose 23.5 percent, its best showing since 2003.
But sustaining that momentum in the new year likely would require a big drop in the unemployment rate and strong corporate profit gains, along with stable borrowing costs–a combination few analysts are forecasting.
"The easy money has been made already," said Bill Stone, chief investment strategist for PNC Wealth Management. "You’re not going to see another 65 percent move in the next nine months."
In the last day of the year, more signs of healing first pleased investors, then had them concerned about the economy’s ability to thrive without government help. Light trading volume exaggerated the market’s moves, sending the Dow Jones industrial average down 120.46, or 1.1 percent, to 10,428.05.
The year’s stats tell an incredible story across the financial markets:…
Stock market gains often come months before economic recoveries are confirmed. That’s because investors tend to bet on how they think business conditions will be six to nine months in the future. In downturns during the past 60 years, the S&P 500 index hit its bottom an average of four months before a recession ended and about nine months before unemployment reached its peak…
Ron Kiddoo, chief investment officer at Cozad Asset Management in Champaign, Ill., said the market can continue its rally through 2010 only if investors see that companies are again hiring, bringing the unemployment rate down for its present 10 percent rate, and that consumers start spending more.
"We can only go on promises of economic…
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GOLDMAN SACHS 2010 INVESTMENT OUTLOOK – THE BULL WILL CONTINUE
by ilene - December 23rd, 2009 5:53 pm
GOLDMAN SACHS 2010 INVESTMENT OUTLOOK – THE BULL WILL CONTINUE
Courtesy of The Pragmatic Capitalist
The rally is going to continue into 2010 according to Wall Street’s most influential bank (Please see here for Goldman’s top 10 trades of 2010). Analysts at Goldman
Goldman sees very low rates, stronger than expected earnings, strong commodity demand and investor reallocation driving prices higher. Goldman sees no rate changes through 2011 – one of the most accommodative outlooks of any bank we have covered. Stronger than expected revenue growth and continued margin expansion will result in 15%+ equity returns in the upcoming year. Although they see a continuation in the rally some moderation is expected. As we previously mentioned, their analysts expect many similarities to 2004. David Kostin wrote:
“Continued profit margin resiliency from prior aggressive cost reductions should drive strong returns in early 2010 and push the S&P
500 towards 1,300.”
Their analysts in Europe are even more bullish. They see the DJ STOXX 600 rising 20% to 300 by the end of 2010.
Goldman argues that we are transitioning into the growth phase of the recovery from the hope phase. This period is generally characterized by stabilization in economic growth and lower equity returns than the hope phase. Nonetheless, doubt remains and catalysts for higher stock prices remain.
Perhaps most important, Goldman sees a continued influx of cash to the equity markets. Thus far, investors have been risk averse and either remain in cash or have moved into bonds. Goldman sees a substantial move into equities as investors become less risk averse.
How to play it? Thematically they focus on three key themes:
- Dispersion – higher growth and higher sustainable returns companies.
- BRICs exposure.
- High and growing dividend growth companies.
* You can find Goldman’s 2010 commodity predictions here.
Source: GS
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Mid-Year 2009 Checkup
by ilene - July 3rd, 2009 7:23 pm
Here’s Karl Denninger’s mid-year review of his new year predictions, and thoughts on 2009 part 2.
Mid-Year 2009 Checkup
Courtesy of Karl at The Market Ticker
It doesn’t seem possible that six months have passed under the bridge of time in 2009 yet, does it? Yet they have.
Let’s take a look at the scorecard first from my 2009 Prediction Ticker, remembering of course that I have six months left!
- The economy will not recover in 2009. No sign of it yet, "green shooters" be damned. I predicted that U3 would reach 8% by the end of the year, it has exceeded that wildly, and is now 9.5%. U-6 also has exceeded my predicted value already.
- Deflation, not inflation, will become evident well beyond housing. Already has. CPI and PPI have come in with negative prints as has capital goods pricing.
- Housing prices will continue to decline. Yep.
- The Fed’s attempt to "pump liquidity" will be shown to be an abject failure. I’ll leave this one on the table for now; I believe the evidence is in, but I’m in the minority. Score this one as a "no result" as of yet.
- GDP will post a 12-month negative number. 12 months aren’t up yet, but we’re working on it!
- The Stock Market has not bottomed. Remember, this was made with the market around the 900 level. Major check; we declined to 666. My secondary prediction was a 50% trading range and a 5xx low; we missed that by 67 points, but I still have six months left. I’m sticking with this one.
- Precious metals will not be a safe haven. Oh Jim Sinclair! Where’s my $1,600+ gold price? (Or for some, their $5,000+ gold price?) Missing, that’s where. I know, I know, its all manipulation (instead of debt deflation.) Check.
- The Dollar will not collapse. Hasn’t yet.
- The pound or euro will be where the FX dislocation originates if it occurs. I predicted Par for both being a possibility, not happening yet. We’ll see what the next six months bring.
- The US Consumer will go from a negative savings rate to a seriously-positive one. I’m predicting 4% but it could go as high as 10%. Major double-check! We’re up close to 7% now. That’s a home run in any book.
- Commercial Real Estate will effectively collapse. The REITs have not yet imploded but the pricing and occupancy look like something that came out of the back end of a horse. Anyone got a finger to lend to push…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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