Why Is The “Smart Money” Selling? – Lance Roberts
“The U.S. market is now in the third, mature, late-stage, overvalued, overbought, overbullish, Fed-enabled equity bubble in just over a decade. Like the 2000-02 plunge of 50%, & the 2007-09 plunge of 55%, the current is likely to end tragically.
BYRON WIEN: I Am Worried About The Second Half Of 2013
In his commentary, Wien revisits this theme (emphasis added):
Although there is a palpable degree of optimism about corporate performance in the second half of this year, I wonder if it is justified. Companies have generally beaten analysts’ estimates more than two-thirds of the time so far this year, but I think that is mostly because management guided estimates lower so the results would compare favorably. That was certainly the case for Alcoa and Coca-Cola. United Parcel Service did not prepare the market for disappointment and the stock declined sharply. In the technology sector Microsoft, Intel and Google missed estimates. Second-quarter earnings are only expected to be up 2% over 2012 levels and full-year estimates are only projected to grow 4%–6% over last year, with much of that improvement coming from stronger performance in the second half.
It is unlikely that we are going to see better earnings if sales don’t improve. Second-quarter sales are only expected to rise 1.25% over last year and full-year estimates are for a 2.75% increase. If there is some pressure on margins from modestly higher labor costs, depreciation and energy prices, that meager level of revenue improvement may not be enough to keep margins from eroding. It has been my view that profit margins are peaking and we should see if that observation is correct in the second half of 2013.
Will this bring down the Nikkei and S&P 500….Again?
CLICK ON CHART TO ENLARGE
What currency has rallied and in turn the Nikkei and S&P 500 have fallen hard at the same time? When the Yen has hit the 20-year support line in the left chart the Nikkei and SPY fell hard (50%+ for both) back in 2007 at (1).
Now the Yen is back to the 20-year support line at (2) and the Nikkei is up against a 20-year resistance as well.
Could a Yen rally off support cause the Nikkei to fall at resistance and create downside pressure on the SPY? Possible for sure!
Japan Is Flashing a Warning For What is Coming Our Way
Fed Balance Sheet vs. Stock Market; Will QE Cause Inflation? US in a Minsky Bubble? About to Go Japanese? Looming Credit Crunch?
In response to Japan Near Stagnation Following 9 Months of Growth; Service Sector Prices Back in Deflation; Spotlight on Abenomics My friend “BC” writes …
With little or no bank lending growth, decelerating wage growth, and trend growth of real GDP per capita at 0% to negative implies the 3- and 5-year change rates of US M2+ will decelerate from 2-3% to 0-1% in the next 5-6 years as occurred during the early to late ’00s in Japan.
We’re not turning Japanese because we want to, and we have convinced ourselves that we won’t, even though the too-big-to-fail banks and Fed are responding in precisely the manner one would expect as we, in fact, turn increasingly Japanese.
The S&P 500 is ~200% overvalued in this context in a classic “Minsky Bubble”.
Dragon Drags On: China’s Slowdown Sends Ripples of Fear Around World
The cash crunch at the end of June drove up the interbank lending benchmark to a four week high, and the bank responded by removing controls on lending, now letting institutions self-regulate lending rates which were previously controlled by the People’s Bank of China.
China’s central bank conducted reverse-repurchase operations for the first time in five months, helping alleviate a cash squeeze that drove the benchmark interbank lending rate up.
“We have to see what happens now in the context of the credit crisis that has been developing for years now. As much of the Chinese economic growth since at least 2009 has been the direct result of Bank of China liquidity injections into the Chinese economy. Now that we have the Xi Jinping administration coming along and trying to supposedly rebalance the Chinese economy away from fixed investment and more towards house hold consumption, they are basically threatening to close that spigot of liquidity into the markets,” James Corbett, the editor of a Japan-based news website told RT.
July Records Biggest Inflows… Into Cash?
Three Years Of Domestic Equity Fund Flows In One Chart
Spot The Next Credit Crisis
Inside the Mind of a Corporate Cheater and QE Exposed
Obama and the US Government Dump Down 10 Trillion USD Liabilities to the Rest of the World.
Nearly One-Third Of America’s Massive Federal Student Loan Debt Is Either Late Or In Default
Time to get bearish on stocks: Strategist