Thursday, June 16, 2011
Quiet Out There
The trading action is surprisingly placid. This market seems to be pricing in a Greek rescue but if there are any delays or problems, we'll get to SPX 1250 in a hurry. And the economic data coming out of the US is horrid. Philly Fed came in negative -7.7 versus expectations of +7. At some point, the weakening economy will funnel down to earnings. And valuations are not so good this time, compared to summer of 2010. There is a LOT less margin for error.
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12 comments:
I disagree.
This up day has little to do w Greece. We actually had some decent numbers today. Except the one you noted.
If/when we get the Greece bailout this weekend we should see a bigger move up. This market is very oversold.
The risk/reward favors the bulls here.
We havent even tested the 1256 area yet. I think we bounce IF we even get there.
If you or anyone out there is so bearish. what valuation would you put on the s&P? And why? Do you think it should trade closer to 1150? 950? 1350? Every economist I've recently are calling for GDP to be in the 3-4% range for the remainder of this year. Not great but better than the last 6 months. I'm also expecting good earnings in July.
Economists are notoriously backward looking. They are expecting what happened in 2010 to repeat. But you have China slowing down, Europe is the same mess, and the pent up demand from 2008 2009 is used up. The fundamentals are definitely worse now than in 2010 from a forward looking perspective.
We can have a summer rally along the way to get rid of the negativity and oversold readings, but I don't see a repeat of 2010. In fact, if we have a rally back to 1340, I would be expecting a sharp drop in September or October as the reality sinks in.
Oh I forgot, unless the payroll tax cut is renewed and another pork and barrel stimulus package is shoved down our throats, the public sector will no longer be providing a tailwind to the economy.
ok fair enough, but you didnt answer my question. What is fair value?
I heard someone on cnbc today saying Greece is like lehman collapse (hardly). Does that mean we go to 2009 lows???
back to 683 on the s&p...please.
These people are creating this unwarranted panic. Greece is tiny. Them defaulting (which they won't) means almost nothing to our economy/markets! thats a fact jack.
lehman was tiny too but everyone's tied by derivatives. point is banks bluff world into thinking that defaults is end of the world. it ISN'T. we'd do alot better if we'd let the system crash and get rid of these crooks and rebuild em. as perverse as it may sound, a market crash would help the world long term
dude this market is NOT going to crash.
i guess this is what everyone was waiting for ..total fear and capitulation. .
Sigh, not with the "let it crash and rebuild" again *facepalm*. Better rebuild without letting it crash, it's less painful and takes less time. Or did you not see what happened to the real economy the last time there was a financial calamity?
Best let it default when the markets have finally concluded that Spain really is sound (which it is), when consumers are optimistic again and start spending. So then it really is no big deal. What's a disaster today is a nuisance tomorrow.
Congratulations to the Boston Bruins!
Well deserved win!
I don't know what fair value is. History doesn't tell you what fair value is, it just tells you the valuations stocks traded at in the past. And stocks are more expensive now than they were throughout the 1970s up to the mid 1980s. That is based on price to book and normalized price to earnings ratios. Also, stock market cap to GDP ratios are high. Record profit margins are another bad sign because they have historically been mean reverting.
I can go on and on, so historically, we are overvalued, but maybe we are in a new paradigm of corporate oligopolies with fat profit margins at the expense of the poor.
Ahh, the emotions of trading. They will NEVER change. Why is it people can't see a buying opportunity staring them in the face? Are they just still with fear? Are they trying to pinpoint the exact turning point?
buy buy buy buy....I hope that helps.
how do you rebuild something without a crash. if it's fully built already, how do you build on it. how do increase consumption when everyone's already fat. how does anyone aspire to wealth when the oligarchs have cornered everything? is that what an economy of companies that produce nothing like linkedin, groupon and pandora is. the vast majority of americans will realize taking out a small % of people who run these banks would be a positive
history always repeats.
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