Posts Tagged ‘rally built on quicksand’

THE STOCK MARKET IS DISLOCATED FROM REALITY

THE STOCK MARKET IS DISLOCATED FROM REALITY

Quicksand Trouble

Courtesy of The Pragmatic Capitalist

David Rosenberg is still unwavering in his belief that the rally is built on quicksand:

There are some very serious headwinds facing the U.S. economy, and one of them is access to credit for people who are at the lower end of the income spectrum (and who also represent the greatest default risk). A great article on this can be found on the front page of the weekend WSJ (The ‘Democratization of Credit’ Is Over – Now It’s Payback Time). Families at the lower end of the income spectrum spend nearly all of their income, so this is a vital part of the economy and it is going to be very difficult for lower-income families to secure credit going forward. The ratio of credit card debt outstanding to income is 50% higher for the bottom 40% of the income strata than is the case for the upper 40%. The highest default rates are the folks at the bottom of the pay scale. In 2007, fully 35% of poor families had a balance owing on their credit card compared with 21% in 1989. This is the byproduct of government policy inducing lenders to make credit cards available to high-risk, low-income individuals — a reckless policy drive that started in the late 1970s (the policy did help drive homeownership rates up and crime rates down).

Now that lenders have started to respond to their record-high delinquency rates by rationing credit, a mad scramble for cash is occurring to replace the loans — food stamp usage is up 22% year-over-year, pawn shop business is up nearly 40%, and there is a tidal wave of applications for Social Security disability benefits that are not explained alone by workplace mishaps.

In any event, so much effort is being expended by the government to keep the credit cycle going that it isn’t even funny, nor is it useful, anymore. Allowing households to still finance almost 100% of a new house purchase has meant that the FHA default rate for loans made in the last year has surged to 20%; and to 24% for loans made since 2007. Private lenders are now requiring a 20% downpayment, and the credit officers at the FHA only need a 3.5% downpayment. The U.S. taxpayer could be facing up to…
continue reading


Tags: , , , , , ,




5 REASONS THE RALLY IS BUILT ON QUICKSAND

Click here for a FREE, 90-day trial subscription to our PSW Report!

5 REASONS THE RALLY IS BUILT ON QUICKSAND

rally built on quicksandCourtesy of The Pragmatic Capitalist

From the desk of David Rosenberg this morning:

1. This remains a hope-based rally (with strong technicals). I say that because during this six-month 50%+ rally in the S&P 500, the U.S. economy has shed 2.4 million jobs, which is almost as many as we lost during the entire 2001-02 tech wreck — in just six months. The market’s ability to shrug off the loss of 2.4 million jobs is either a sign that it is treating this as old news or sees the cost-cutting as good news for profits. Either way, what we are seeing transpire is without precedent — the magnitude of the employment slide versus the magnitude of the market advance. Truly fascinating stuff.

It’s remarkable to add that jobless claims were 550K this morning – a staggering number this deep into a recession.  But fear not – it was “better than expected”.

2. Companies have not really been beating their earnings estimates — only the very final estimates heading into the reporting quarter. For example, the consensus view for 3Q EPS at the start of the year was $21.00, last we saw the estimates were down to just over $14.00. But there is a deeply rooted belief that earnings are coming in better than expected. This is a psychology that is difficult to break. It is completely unknown (for some reason) that corporate revenues are running at a -25% YoY rate, which compares to the -10% we saw at the worst part of the 2001-02 bear market and the -3% trend at the most negative point in 1991.

It’s also interesting to note the very real weakness in corporate revenues.  The bottom line can be manipulated, but revenues never lie….

3. Valuation is a poor timing device but even on “normalized” trailing 10-year earnings, the S&P 500 is trading near 18x, which is now above the historical average of 16x.

Market value matters less to me at this juncture.  If we were to get a much stronger than expected recovery you could easily argue that the market is cheap.  PE ratios are a moving target based on guesses.  That is what makes them poor market timing indicators.

4. All the


continue reading


Tags: , , , , , ,




 
 
 

Zero Hedge

More States Are Seeing Unused COVID Jabs Pile Up As Poor Countries Shut Out

Courtesy of ZeroHedge View original post here.

The other day, we reported on an interview with from Dr. Scott Gottlieb, a former director of the FDA under President Trump who frequently appears in the press to offer analysis and commentary on the rollout of the COVID vaccine, along with federal COVID policy more broadly.

Yesterday, the focus of the interview was a criticism lodged by Dr. Gottlieb against the Biden administration's target of 200MM Americans vaccinated by the end of the month. Hours after our post, Bloomberg News shared a startling piece of analysis: Across the US, unused vaccines ar...



more from Tyler

ValueWalk

Managing Investments As A Charity Or Nonprofit

By Anna Peel. Originally published at ValueWalk.

Maintaining financial viability is a constant challenge for charities and nonprofit organizations.

Q4 2020 hedge fund letters, conferences and more

The past year has underscored that challenge. The pandemic has not just affected investment returns – it’s also had serious implications for charitable activities and the ability to fundraise. For some organizations, it’s even raised doubts about whether they can continue to operate.

Finding ways to generate long-term, sustainable returns for ...



more from ValueWalk

Phil's Favorites

Scorpion Capital Calls a New York Stock Exchange Listed Company a Fraud

Courtesy of Pam Martens

New York Stock Exchange

On April 1 we wrote the following about the sorrowful state of the listing standards at the New York Stock Exchange:

“We rarely make predictions but we’re going to make one with confidence today. The New York Stock Exchange’s efforts to capture more market share of the IPO business by listing highly questionable Chinese companies and blank-check companies (...



more from Ilene

Biotech/COVID-19

Scientists are on a path to sequencing 1 million human genomes and use big data to unlock genetic secrets

 

Scientists are on a path to sequencing 1 million human genomes and use big data to unlock genetic secrets

A complete human genome, seen here in pairs of chromosomes, offers a wealth of information, but it is hard connect genetics to traits or disease. HYanWong/Wikimedia Comons

Courtesy of Xavier Bofill De Ros, National Institutes of Health

The first draft of the human genome was publ...



more from Biotech/COVID-19

Chart School

Money Printing Asset Price Targets

Courtesy of Read the Ticker

The FED giveth and the FED taketh away. Right now the FED is giving a lot into 2022 US Mid Terms. 

Unless the FED breaks the market, here are some BRRRRR asset price targets, not normal price targets but money printing adjusted price targets. 


BITCOIN 175,000 to 500,000 USD

Click for popup. Clear your browser cache if image is not showing.





DOW to 40,000 to 50,000

Click for popup. Clear your browser cache if image is not showing.



More DOW

Click for popup. Clear...



more from Chart School

Politics

Colombia gives nearly 1 million Venezuelan migrants legal status and right to work

 

Colombia gives nearly 1 million Venezuelan migrants legal status and right to work

Venezuelans wait at the Colombian border to be processed and housed in tents in 2020. All Venezuelans now in Colombia will receive a 10-year residency permit. Schneyder Mendoza/AFP via Getty Images

Courtesy of Erika Frydenlund, Old Dominion University; Jose J. Padilla, Old Dominion University...



more from Politics

Kimble Charting Solutions

Will Historic Selloff In Treasury Bonds Turn Into Opportunity?

Courtesy of Chris Kimble

Long-dated treasury bonds have been crushed over the past year, sending ETFs like TLT (20+ Year US Treasury Bond ETF) spiraling over 20%.

Improving economy? Inflation concerns? Perhaps a combination of both… interest rates have risen sharply and thus bond prices have fallen in historic fashion.

Today’s chart looks at $TLT over the past 20 years. As you can see, the recent decline has truly been historic. $TLT’s price has swung from historically overbought highs to oversold lows.

At present, the long-dated bond ETF ($TLT) is trading 7.8% below its 200-...



more from Kimble C.S.

Digital Currencies

Crypto - The Beginning of The Beginning... and the Coinbase IPO

 

Crypto – The Beginning of The Beginning… and the Coinbase IPO

Courtesy of Howard Lindzon

I am starting to say the ‘beginning of the beginning’ a lot.

Last month I used it in a blog post about active investing.

Bitcoin and Ethereum are a main reason I believe we are at the beginning of the beginning of active investing and the Coinbase ($COIN) direct listing tomorrow [Apr. 14] is likely why we are still just at the beginning of the beginning of crypto and decentralization.

If it was t...



more from Bitcoin

Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



more from M.T.M.

Promotions

Phil's Stock World's Weekly Webinar - March 10, 2021

Don't miss our latest weekly webinar! 

Join us at PSW for LIVE Webinars every Wednesday afternoon at 1:00 PM EST.

Phil's Stock World's Weekly Webinar – March 10, 2021

 

Major Topics:

00:00:01 - EIA Petroleum Status Report
00:04:42 - Crude Oil WTI
00:12:52 - COVID-19 Update
00:22:08 - Bonds and Borrowed Funds | S&P 500
00:45:28 - COVID-19 Vaccination
00:48:32 - Trading Techniques
00:50:34 - PBR
00:50:43 - LYG
00:50:48 - More Trading Techniques
00:52:59 - Chinese Hacks Microsoft's E...



more from Promotions

The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



more from Tech. Traders

Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



more from Lee

Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

http://www.insidercow.com/ more from Insider





About Phil:

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...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.