Bears on the Brink: ‘I Can’t Fight It Anymore’
Though it’s already a few weeks into winter, Wall Street bears may be finally ready to hibernate, though no doubt against their will.
A powerful rally in which virtually all fears have been bypassed has pushed stock marketdetractors to the brink, ready to wave the proverbial white flag as the only direction for the market seems to be up, up, up.
“They’re almost ready to throw in the towel,” Scott Bauer, of Trading Advantage, told CNBC. “I don’t want to say ‘capitulation,’ (but) guys down here really are saying, ‘All right, I can’t fight it anymore, let’s go.’”
“When everyone jumps in and valuations get frothy, that usually is the beginning of the end of a bull run,” Krosby said. “You can’t fight the tape, but you want to be more cautious. The higher it goes, the more cautious you want to be.”
The International Monetary Fund (IMF) has warned again of a weakening global economic recovery despite government efforts to stimulate growth.
The global economy is likely to grow at a slower rate than previously forecast over the next two years, the organisation said in its latest report.
It said it now expected the eurozone to remain in recession in 2013, having previously predicted growth.
The UK’s growth forecasts have also been revised down.
UBS Chairman: US Recovery to Be ‘Sluggish’
The U.S. economy will grow at a “sluggish” pace that could be challenging for the financial- services industry, said UBS AG Chairman Axel Weber.
“We are picking up momentum, but not in an accelerated way,” Weber said Wednesday in an interview on CNBC. The economy probably will grow at about 2.5 percent this year and “it’s probably going to go back to 3 percent” in 2014, he said.
AAPL Meets EPS, Misses Revenues, Fails To Impress With In Line iPhone Sales, Total Cash Grows To $137.1 Billion
The most anticipated earnings release of the quarter has come and it has been a dud, at least judging by the market’s expectations and its response. Because while EPS beats just barely (a far cry from the epic EPS beats of Steve Jobs days) coming at $13.81 on expectations of a $13.53 print, revenue outright missed, coming at $54.5 billion on expectations of a $54.9 billion Q1 2013 result. Furthermore, fears about profit margins were proven correct, with total gross profit coming in at $21.1 billion, which alas was 38.6% of revenue, well below the vaunted 40% threshold (as a reference margin was 44.7% a year ago, and 40.0% a quarter ago). And finally, the breakdown by components in the iPhone 5 release quarter was just, well, meh.
- iPhone sold: 47.8 million vs 47.8 sales expected, right in line with consensus, and a far cry from the Gene “Channel Checks” Munster 50 million+ handle
- iPads sold: 22.9 million, just above the 22.4 million expected, but offset by
- Macs sold just 4.1 million, well below the 5.1 million expected.
In the old days, it was Fed via POMO to stocks; but given the new normal, now we have levered POMO to rescue us via vol compression and yet again – today saw risk-assets sliding all night (though admittedly only around 0.5% off highs) only to be rescued by a vol-compressing equity push that started the moment POMO finished. HY credit was tinkered with in the last hour to keep things afloat and of course AAPL soared into its earnings report. The debt-ceiling vote did little to maintain risk-on as CAD weakness (BoC holding off from rate hikes) pulled the USD higher, and hurt risk-on commodities – as Oil plunged on the day. Treasury yields continued to fall – entirely ignoring stocks once again – even though stocks caught down to risk early and ended at new five-year highs on the Dow (thanks almost entirely to IBM). So low volume in stocks (AAPL decent volume), low average trade size in S&P futures, and a disconnected equity market from bonds and FX once again… eyes down for an Apple full-house…
Correlations between stocks and risk assets broke once again as POMO finished…
and after AAPL reported… Stocks collapsed back to Bond and FX reality!!!
The House of Representatives is expected vote next week to raise the debt limit for three months.
“This is just buying time,” Weber said, according to CNNMoney. “We are now living at the expense of future generations. That’s not a long-term sustainable solution.”
The Fed’s has accumulated $2 trillion in Treasuries and mortgage bonds since 2008. Critics have long warned that the bond-buying program could lead to a dangerously bloated Fed balance sheet.
Gerald Celente identifies important trends he sees ahead in 2013.