Analysis Topic: Stock & Financial Markets
The analysis published under this topic are as follows.
Monday, August 08, 2022
Stock Market Unclosed Gap / Stock-Markets / Stock Market 2022
By: Monica_Kingsley
S&P 500 bulls made a good run, but didn‘t deal with the bearish outcome looming, The renewed tightening bets spurred by strong headline NFPs figure, will take their toll on risk-on assets that had been driving Friday‘s run. Bets on another 75bp hike in Sep have increased dramatically, practically proving Daly or Kashkari right in that the Fed isn‘t done yet or even close to the Fed funds rate to really get inflation down. While they claim that 2% is doable and soft landing within reach, the progression from 9% downwards just doesn‘t go fast like that. At best (repeating myself for months here), they would get to 5-6% CPI, which means a tough Sep and one more FOMC still this year. Combined with balnce sheet shrinking projections, that would take a great toll on the real economy – one that is being softened by the still very expansive fiscal policy.
Let‘s look around the world (apart from the troubles in Europe and Asia such as shown in JPY weakness), many other central banks are tightening, Latin America is also tightening. It‘s not only UK and the implications discussed on Friday:
(…) Let‘s have a look at yesterday‘s Bank of England moves, kind of foreshadowing what‘s reasonable to expect from the Fed. In the UK, the prospect of entering recession Q4 2022 amd remaining in it for more than a couple of quarters, is being acknowledged. The central bank though intends to keep tightening anyway, preferring to take on inflation after it ran out of control longer they publicly anticipated. Meanwhile in the States, unemployment claims have edged higher – indicative of growing softness in the labor market.
Long-dated Treasuries continue rising as is appropriate in these conditions of economic slowdown slowly gathering pace. Similarly to inflation expectations, they‘re not yet taking the Fed‘s hawkish rhetoric absolutely seriously unlike commodity prices that are at best carving out a bullish divergence (still in the making, therefore without implications yet). Precious metals appear farther along the route of acknowledging the upcoming stagflationary reality as I continue looking for inflation to remain in the stubbornly high 5-6% range no matter the Fed‘s actions over the next 3 FOMC meetings at least. Obviously, the hotter the underlying markets, the more tightening has to be done, and that‘s extra headwind for the markets, and one making the Fed pivot a bit more elusive.
The key thing that has changed from the above, is the turn in yields – Treasuries would have a harder time rising now, but given that I expect better CPI on Wednesday (oil is down and hasn‘t bottomed yet etc), yields should retreat in what I look to be a positive market reaction – one of hoping that the Fed wouldn‘t tighten that much as is feared today they would. This wouldn‘t however save the stock market bulls.
Friday, August 05, 2022
Stock Market Rallying On Slowly Thinning Air / Stock-Markets / Stock Market 2022
By: Monica_Kingsley
S&P 500 rose, driven by tech at expense of value, which is normail in economic slowdowns. The junk bond rally however stands out – a prime candidate to attract selling at the nearest whiff of risk-off. The many fundamental reasons described in Monday‘s article, remain intact, if there weren‘t geopolitical ones. Tellingly, the yield curve inversion continues deepening, and bonds aren‘t buying the tightening story in the least – they fear the Fed overdoing it. And that‘s a key catalyst behind yesterday‘s decline in real assets, with its new interpretations of neutral Fed funds rate, or „having enough not to make trade-offs“ inflation remarks.
Sure, ISM services PMI provided a daily boost to the rally, and so the revamp calculations behind tomorrow‘s non-farm payrolls would work (would the pesky hours worked sending the opposite message, get recalculated as well?) in a bid to keep the increasingly FOMO confidence in the S&P 500 rally going. It still has the hallmarks of a short-covering rally, and not of genuine animal spirits – that doesn‘t square with the dreaded R word.
Thursday, August 04, 2022
Stock Market Trend Pattren 2022 Forecast Current State / Stock-Markets / Stock Market 2022
By: Nadeem_Walayat
My stock market big picture remains to expect the Dow to target a trend towards 29,600 by late August / Early September. Note 29,600 is a TARGET for a low and NOT THE LOW, No one can KNOW THE LOW with any degree of confidence, all one can do is arrive at a high probability target and then look to see if the market confirms that expectation or not, so far the market is confirming it is heading for 29,600.
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Thursday, August 04, 2022
Will the S&P 500 Stock Market Index Go the Way of Meme Stocks? / Stock-Markets / Stock Market 2022
By: EWI
Here's what usually happens when "financial lunacy" is prevalent
You don't hear much about the meme stock craze anymore -- and for good reason.
It's all but dead and has been for months (Barron's, Jan. 28):
A Year After It Began, Meme-Stock Mania Is on Life Support
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Thursday, August 04, 2022
Stock Market Another Upswing Attempt / Stock-Markets / Stock Market 2022
By: Monica_Kingsley
S&P 500 refused to swing higher yesterday, and bonds weren‘t much risk-on either. Revisiting the neutral Fed funds rate comments didn‘t do much good for risk sentiment, even though HYG doesn‘t yet reflect that with its closing price. A new attempt at 4,140s looks to be in the making, and even if we get a break higher, it‘s going to be a fake one, and fail. It would also coincide with a rejection of lower VIX values around 22, in favor of reverting back to the high 20s recent average.
The current optimism seems misplaced, and the upcoming ISM services PMI would reveal the slowly deteriorating internals of economic growth. Coupled with manufacturing PMI, these leading indicators illustrate a tough real economy to come in late 2022 / early 2023 – the dreaded R word.
Wednesday, August 03, 2022
The REAL Stocks Bear Market of 2022 / Stock-Markets / Stock Market 2022
By: Nadeem_Walayat
US Housing market variables are in a state of flux for we have the consequences of Quantitative Tightening with the Fed having started to sell $15 billion of Mortgage Backed securities per month, US teetering on the brink of recession given that Q1 saw -1.4% with Q2 also expected to be weak, a coin flip between +0.2 and -0.2 or worse and thus hey presto the RECESSION has ARRIVED! Brewing Financial Crisis 2.0 that I I flagged some 10 months ago where the reverse repo market of $1 trillion has now doubled to $2 trillion which implies increasing counter party risk where we wont know what the banking crime syndicate has exactly been upto in the housing market until banks start failing. Interest rate hikes of 0.75% when the Fed Chairman said 0.75% was off the table which means US rates are probably going to go a lot higher tham most can imagine today, consensus is 3.25% to 3.5%, reality could be north of 5%, so a lot of variables are in a state of flux which means instead of seeing clarity with more data I am seeing confusion!
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Sunday, July 31, 2022
US Fed Is Battling Excess Global Capital – Which Is Creating Inflation / Stock-Markets / Financial Markets 2022
By: Chris_Vermeulen
The US Fed continues to bring the big guns, raising rates another 75 bp (0.75%) on July 27, 2022. Even though they stated the economy is softening, current Inflation and CPI data suggest otherwise. The US Fed may be forced into another 75~100 bp rate increase next month if the US economy continues to show strong CPI and Inflation trends. There is only one other time in recent history like the current market environment – 1998~2004.
The DOT COM Bubble was unique in the sense that excess capital flowed into technology/internet companies’ hand-over-fist. It seemed all you had to do was register a URL, come up with some crazy business plan, and go talk to investors/VC. It was not a crisis like the 2008-09 Global Financial Crisis event. The DOT COM Bubble was a process of unwinding/consolidating excess capital away from a euphoric speculative phase in the markets.
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Friday, July 29, 2022
What it's like at a Stocks Bear Market Bottom / Stock-Markets / Stock Market 2022
By: Nadeem_Walayat
This clip from March 2009 illustrates what it's like at a market bottom, that had analysts stating at Dow 6490 that the Dow was nowhere near a bottom which was at least another 20% to 25% further below.
AT THE BOTTOM
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Tuesday, July 26, 2022
The Psychology of Investing in a Stocks Bear Market / Stock-Markets / Stock Market 2022
By: Nadeem_Walayat
Every bull market is followed by a bear market and every bear market is followed by a bull market, where courtesy of the electron and inflation mega-trends the general indices are on an upwards exponential trend trajectory. Thus all bear markets are living on borrowed time and thus ones focus should be on accumulating positions in good stocks i.e. those that actually generate earnings and have good prospects for continuing earnings growth that courtesy of bear market negative sentiment results in prices trading to under value stocks i.e. to under X18 earnings, where everything above X18 is carrying a premium which is why I completely sold out of many stocks last year such as Amazon and Nvidia even though they had yet to peak due to the risks of a valuation reset as I covered in my in-depth analysis of August 2021
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Tuesday, July 26, 2022
Stock Market Bearish Test / Stock-Markets / Stock Market 2022
By: Monica_Kingsley
S&P 500 bears took over from the 4,010s area but didn‘t close convincingly – and bonds didn‘t tank, which means this rally isn‘t yet over. It may extend beyond Monday‘s premarket, and even cover all this time of upcoming key tech earnings reports. These wouldn‘t be as disastrous as is the market‘s expectation – suffice to look at Tesla. And if they are smart to avoid guidance for 2H 2022 (second half), S&P 500 may not stop above 4,030s in the least. HYG holds the key now, VIX isn‘t about to spike sharply, and the dollar isn‘t on a tear either.
Macroeconomically, we have many leading indicators dipping negative – such as the new orders component of the Philladelphia Fed manufacturing index, which makes U.S. recession at the end of 2022 / early 2023 a foregone conclusion. S&P global composite is now negative as namely Europe is struggling already. So, the stock market bulls are running on borrowed time, yet in the best case scenario, it can take longer than the next week for prices to resume their downswing – reality of not lower P/E multiples, but of lower earnings over the quarters ahead, would catch up with stocks as much as the stubborn inflation keeping above 5% no matter the coming two Fed rate hikes. Think stagflation with stocks in a trading range, and reversion to the mean strategies having a good time. More thoughts are reserved for premium subscribers.
Friday, July 22, 2022
Expert Says the Stock Market Tide Has Gone Out / Stock-Markets / Stock Market 2022
By: The_Gold_Report
Expert Michael Ballanger reviews the current market cycle, Elon Musk's impact on the stock market, and reveals the stock he says has a positive outlook amidst the chaotic backdrop of summer 2022.
As a sexagenarian market philosopher soon to become a septuagenarian market philosopher, I am finding myself somewhat embarrassed when younger people (other than family) ask me my opinion on something. I usually try to reply to their inquiry in the manner in which my father (RCAF WWII navigator William Roland Ballanger) used to advise me in the very early days of my hockey career when some youngster would come up for an autograph or a simple “Hi Mike” to which I would always stop, bend down to his height, extend my hand, and say, “Hello to you, and what would your name be?” at which point he (or she) would look up to their parent(s) for guidance and then (almost always) tell me.
At this point in the encounter, I would offer the beaming youngster my hand and as we shook, I would say, “It is a great pleasure to meet you, and thank you for saying hello.”
That behavior came from RCAF Navigator W.R. Ballanger who recounted the story from his life that dwelled in the realm of geopolitical nonsense in the days after the Nazi's threw a historically successful and prosperous German society into total ruin and starvation.
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Thursday, July 21, 2022
Test drive EWI's Financial Forecast Service / Stock-Markets / Financial Markets 2022
By: EWI
Hi reader,
Market action this year has hurt A LOT of people. Cryptos. Meme stocks. Tech stocks. We've seen some huge percentage declines -- all against a backdrop of historic leaps in interest rates and inflation.
Lifestyles irrevocably changed, not for the better.
Economists missed it. The Fed missed it. Politicians missed it.
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Thursday, July 21, 2022
Stock Market Peril Approaching / Stock-Markets / Stock Market 2022
By: Monica_Kingsley
S&P 500 had trouble extending gains, bonds didn‘t close on a strong note, and the dollar is readying an upswing. Can easily happen on the ECB move, and poof – there goes risk-on sentiment. Every hike is a move closer to demand destruction, and real assets are afraid – markets aren‘t yet sensing the Fed pivot, and concentrate on hawkish moves ahead. Quoting a bit from yesterday‘s premium analysis:
(…) Stocks are set to muddle through higher – this isn‘t yet the time to translate weakening earnings outlook or declining liquidity into the S&P 500 prices. Bonds need some time before their upswing continues. The dollar retreated, but hasn‘t yet made a top – that event is approaching, and would be seen in greater resilience in precious metals, namely gold. For now, the metals remain lackluster, with copper doing considerably worse (reaching $3.50 would be a success for the red metal this week really, I‘m not counting on that).
More thoughts are to be found within today‘s rich chart sections.
Thursday, July 21, 2022
Important: Are your Stocks in Stage 1, 2, 3, or 4? / Stock-Markets / Stock Market 2022
By: Submissions
Every investor is asking the same question: When will stocks bottom?
As you know, the S&P 500 is down 20% this year and firmly in a bear market.
Since 1929, the S&P 500’s had 14 bear markets... lasting around 19 months, on average. Which means if the current bear market lasts an “average” length, we’ll see the bottom next summer.
But asking when stocks as a whole will bottom is the WRONG question. Instead, investors should be asking…
Wednesday, July 20, 2022
Dow Stock Market 2022 Forecast Trend Pattern / Stock-Markets / Stock Market 2022
By: Nadeem_Walayat
The stock market bounce fizzled out at 4180, thus no break above 4200 to target a trend to 4290 let alone anything higher and one does not need to look far for the culprit. CPLIE of 8.6% as the consensus and likely the FED had convinced themselves to expect inflation to have peaked hence triggering a whiff of panic as to what the Fed will do next to combat inflation.
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Wednesday, July 20, 2022
Stock Market Trend Pattern 2022 / Stock-Markets / Stock Market 2022
By: Nadeem_Walayat
My stock market big picture remains to expect the Dow to target a trend towards a probable bottom by late August / Early September at approx Dow 29,600 So far the stock market has not done anything to negate this scenario and thus remains the direction of travel ahead of my next stock market in-depth analysis.
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Monday, July 18, 2022
Stock Market Risk-On Vs. Liquidity Squeeze / Stock-Markets / Stock Market 2022
By: Monica_Kingsley
S&P 500 ended a losing streak thanks to the still fine retail sales data, and even consumer confidence edged up. In the flattening yield curve characterizing the move to a slow growth phase, it was (and will be) up to tech to outperform value. Also healthcare is likely to see brighter times ahead. If I were to pick two reasons for why I think stocks are bottoming here, it would be the risk-on turn in bonds accompanied by the 10-year yield soundly below 3.25%, and the capitulation in oil stocks (former star performer as these are likely to get pulled down among the last sectors while the key laggards such as tech are on the verge of starting to outperform) coupled with oil holding my $93 support.
Wednesday‘s very hot CPI print means that the pressure on the Fed to keep hiking aggressively, is on. Indeed no pause in inflation, and if PPI is anything to go by (it is) then there is a lot more in the pipeline – and I‘m not bringing up owners‘ equivalent rent, which would continue driving inflation ahead (it‘ll be now service driven as opposed to goods driven). With 50bp obviously not being enough to recoup some of the Fed‘s badly damaged credibility, the question is by how much they hike actually. There is chatter about a full 1%, but another 75bp one looks most probable to me. And should we see signs of inflation moderating (gasoline and heating oil topped in June, which would help the July figures, and with inflation expectations pointing lower now, odds are that we would then get 25bp in September, and that‘s it – midterms next, justifying Fed‘s wait and see posture.
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Sunday, July 17, 2022
Dow Stock Market 2022 Trend Pattern / Stock-Markets / Stock Market 2022
By: Nadeem_Walayat
Dear Reader
This is brief stock market update as I seek to complete my extensive analysis of the US Housing Market which the following contents list indicates extent of -
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Sunday, July 17, 2022
What Are The Driving Forces Behind The Shift In Global Financial Markets Risks? / Stock-Markets / Financial Markets 2022
By: Chris_Vermeulen
Global market risks have shifted dramatically over the past 90+ days. It almost seems as though the global markets turned 180 degrees overnight, generally going from moderately soft monetary policies to very extreme monetary policies and conditions. This sudden shift caught many traders and investors off guard and resulted in -20% to -25% losses for many.
The driving forces behind this sudden shift are inflation and excess capital (M2) because of nearly a decade of near-zero US interest rates. Much of the excess capital created over the past decade has been deployed into global equities, infrastructure, and various speculative instruments (art, homes, cryptos, collectibles, and others). However, without a doubt, the recent burst of inflation is also a result of COVID restrictions. Such restrictions reduced supply capabilities and the resulting interruptions of manufacturing/supply have been felt throughout the post-COVID global recovery.
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Wednesday, July 13, 2022
Stocks, Pot Stocks & Bonds: 5 global Market Forecasts / Stock-Markets / Financial Crisis 2022
By: EWI
Hi reader,
Back in 1992, our friends at Elliott Wave International began offering their institutional subscribers a thin monthly brochure packed with big-picture forecasts for key markets.
Today, 30 years later, Global Market Perspective is still one of EWI's most-read publications.
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