| Monday, September 29, 2014 |
Good morning and Yikes!
Metals are flat but stock futures are down a half percent this morning, Yahoo blames China surprises (US stocks: Futures fall amid Hong Kong unrest, data jitters) but this was predicted a while ago: Mark Twain thinks stocks are in for a rough ride. Busy day beginning an hour before opening w/ reports on Personal Income, Personal Spending and PCE Prices.
Wondering how things will look when the week picks up speed...
http://blogs.wsj.com/moneybeat/2014/09/28/expect-more-volatility-with-stocks-priced-near-perfection/
September 28, 2014, 2:57 PM ET
Expect More Volatility With Stocks Priced Near Perfection
By E.S. Browning
One reason stocks were so troubled last week is that they are getting closer to what Wall Street, in its inimitable slang, calls being “priced for perfection.”
Priced for perfection, unfortunately, doesn’t mean attractive. It means that stock prices are so high that gains depend on a very favorable investing environment, with strong corporate profits, low interest rates, low inflation and continued global growth.
If the environment starts looking less favorable, stocks can weaken, as they did last week.
Stocks probably aren’t completely priced for perfection yet, money managers say, but they are moving that way. The S&P 500 stock index closed Friday at 19.4 times its companies’ net profits for the past 12 months, well above its long-term average of 15.5, according to Birinyi Associates.
Many consider the long-term economic outlook good enough that stocks can keep rising in the medium term. What worries people is the next few weeks and months.
When cracks widen in the investing backdrop and stocks are pricey, traders are quicker to sell. And cracks are widening. Among them: Next year’s expected Federal Reserve interest-rate increases, which are appearing now on investors’ radar screens, growing tensions with Russia and renewed concerns about China’s uncertain economic growth.
“The market is primed for more volatility,” said Scott Clemons, chief investment strategist at Brown Brothers Harriman Private Banking, which oversees $26.8 billion in New York. “We are in for a lot more days like Thursday,” when the Dow Jones Industrial Average fell 264 points, its worst decline since July.
snip
Data this week:
Monday -
8:30 am Personal Income (consensus +0.3%)
8:30 am PCE (Consensus +0.4%)
Tuesday -
9:00 am Case-Shiller
10:00 am Consumer Confidence (Consensus 92.3)
Wednesday -
Domestic Auto Sales (Consensus 5.8 million)
8:15 am ADP (Consensus +207k)
9:45 am PMI
10:00 am Construction Spending (Consensus +0.3%)
Thursday -
8:30 am Initial Claims (Consensus 298K)
Friday - JOBS DAY
8:30 am NFP (Consensus +215K)
8:30 am UE (Consensus 6.1%)
I;m out of pocket Tuesday and Wednesday at the Deutsche Bank Leveraged Finance Conference. Shaq is speaking at lunch tomorrow and Leon Panetta at dinner. I’d rather hear Shaq unless Panetta is going to talk about CIA :-)