-——The market is powered ahead by a growing strength in corporate profits,too———
The piece describes a correlation but buries the reason for market growth. Profits. The line above is a throw away but is the meat of the piece
Companies have ended the quest for growth and have plateaued at a profitable level of operations. The profits are piling up as cash. The profits have gradually increased price to earnings ratios which make the stocks more valuable and desirable. Based on historic P/E’s stocks are reasonable and even cheap.
Stocks aren’t that cheap. The SP500 PE is nearly 18 times, that isn’t cheap. Companies are doing OK profit wise, but it’s only through share buybacks and layoffs. Topline revenue growth looks horrible. You can’t keep growing profits this way without the revenues.
So far only about 4.9% of the companies that have released guidance have raised their estimates, which is awful. This market is unbelievably overextended given the shape of the consumer. Technicals show this market way overbought.
This is out and out manipulation, and when the fall does come it’s going to get very nasty.