Posted on 09/30/2015 6:38:45 AM PDT by SkyPilot
Welcome to the worst day of the year for investors, though you wouldn’t know it by looking at stock futures this morning. Thank the portfolio window-dressers or bouncy dead cats, but the market looks set to fly.
Anyway, that gloomy prognosis for the day fits nicely with the disastrous end to the quarter we’re headed for, set to finish with 8% to 9% losses for the big U.S. indexes. The quarter has delivered the biggest point declines for the Dow industrials DJIA, +1.41% and the Nasdaq Composite COMP, +1.82% since the end of 2008, and the biggest for the S&P 500 since 2011.
Wall Street, though, is hoping to brush the quarter under the rug. A Reuters poll of 40 strategists found that most think the worst is over for stocks. (Less bullish, perhaps, is Goldman Sachs, which cut its S&P 500 target to 2,000 yesterday, though its strategist David Kostin cushioned that with a “flat-is-the-new-up” mantra.) Those strategists polled think the S&P will end up at 2,094 by the end of 2015 — a gain of 2% for the year, but 7% below where they thought it would be when asked a few months ago.
If these market magicians know anything, it’s that stocks needs a catalyst to go up. They can no longer count on the Fed, as one CIO quoted by Reuters rightly pointed out. (Note that Goldman also called for more QE.) This column discussed yesterday how that catalyst will be earnings, and companies themselves will need to put up or shut up to keep the bull from dying.
A 2% gain would keep the bull market going, but not by much.
(Excerpt) Read more at marketwatch.com ...
This part of the article is very telling.....
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Writing for Mauldin Economics, Tony Sagami says the average investor is about to get fleeced. A former Merrill Lynch stockbroker with 30 years of market experience, he chides today’s traders for becoming “cheerleaders who think the Federal Reserve exists to help them make money, which is why Bullard’s criticism is so accurate.”
He portends doom: “Those trend-following knuckleheads on Wall Street don’t realize it (yet), but the stock market will fall without the Fed’s help, because corporate America is starting to really struggle,” predicts Sagami.
Sagami’s evidence? Just 37% of companies have increased their revenue forecasts over the last six months, the smallest number since the 2001 dot-com bust. And just 49% of stocks have seen their earnings-per-share estimates revised up, the least amount since 2012.
What this all means is that Wall Street and its “cheering-pit traders” understand the stock market is going to drop like a stone unless more central-bank stimulus is coming, he says. “Wall Street continues to tell you and me to keep buying stocks, while behind the scenes they are becoming more bearish by the week,” he says.
Pinging those who don't always agree with the doom forecasts, but I do respect your opinions.
That it's being propped up by 4 trillion dollars a year of government spending? Who didn't know that?
Just watch. The day after the gov't shutdown is averted, the market will soar.
After selling this dung as chocolate pudding for seven years, when the next crash comes, Wall St. “experts” won’t have to jump out of windows. They’ll be pushed.
1. We have WAY too many unneeded and obsolete business regulations that need to be phased out.
2. We need a MASSIVE reform of national taxation to make it far more business friendly, especially with major simplification and encouraging savings and capital formation staying in the USA.
It will not.
Likely the government will double down on both.
ping
bump
Not a word about arbitrage.
During that day, the Dow Jones Industrial Average plunged from a high of 16,459.75 to a low of 15,370.33 before rebounding substantially. That intraday point swing of 1,089 points was the largest in all of U.S. history.
Overall, the Dow has down 588.40 points that day. When you combine that decline with the 530.94 point plunge from the previous Friday, you get a total drop of 1119.34 points over two consecutive trading days. Never before in history had the Dow fallen by more than 500 points on two trading days in a row. If that entire decline had fallen within one trading day, it would have been the largest stock market crash in U.S. history by a very wide margin, and everyone would be running around saying that author Jonathan Cahn was right again.
I have to say this about Michael Snyder, he's consistent with his idiocy.
An 1119 point drop at that level would be less than 7%. Doesn't even make the top 20 for the biggest percentage crash.
The “average” investor should not be speculating or market timing or concentrating investments into one or two sectors.
The “average” investor should buy - and hold - small amounts of the major indexes over a period of decades.
Obviously, the time period 2000-2015 has been quite painful and very volatile for young investors just starting to save, and for older investors, who made retirement plans based on long term USA growth averages.
But, that time period has also been marked by many unique and shocking events - the Dot.com mania, the most destructive terrorist attack in world history, the most destructive hurricane in USA history, trillions spent on two Middle East wars, the worst recession since the 1930’s (caused primarily by insane government loan policies for home mortgages), insane money printing Fed policies, insane government debt policies, and insane legal and illegal immigration policies.
In spite of all that chaos, as of today, the SP 500 has gained almost 25% since 2000, and has averaged almost a 2% dividend yield.
Inflation since 2000 is about 35%
So, in spite of what feels like perpetual economic chaos, and even adjusted for inflation, the SP 500 has posted a small positive real return over the last 15 years.
Tx fer the pings guys --it's really good to know what folks are thinking about even while I'll confess that I had a hard time reading the article w/ all the screwy stuff in it. What's important here is to be able to look at the the point of this post --if there is a point. Like, are we saying that stocks have been going down for years now? Are we saying stock prices are going to be going down for several years?
I don’t know....more likely than up is my guess. We will know if things are still unfavorable if they have to do another QE
--and we'll know there was another QE if the market goes up and we'll know QE stopped if the market goes down.
That's because the QE political hacks talk about has nothing at all to do with the Fed Funds Rate, the Fed buying T-bills or other debt because if it did then all we'd have to do is look at which ever the Fed really did and we'd find out it had nothing to do w/ stocks. Instead when we google "quantitive easing" we get MSM stock charts where pundits posted anything they could find that the fed did only on days we had a market inflection.
Mindless politics may be great for ganging up w/ others on the FR but it's sure bad for investing.
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