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NEW YORK (Reuters) - Earnings season is just over a month away, but the early signals are not comforting.
Companies cutting forecasts outpace those raising estimates by the greatest ratio in 10 years, and some sectors, such as materials, have seen a dramatic fall in expectations for the soon-to-be ended fourth quarter, according to Thomson Reuters data.
It is a stark reminder that even as U.S. economic data has improved in recent weeks, the euro zone debt crisis and concerns about slowing growth in China still cast a long shadow.
Yields on Junk bond hitting 5 year highs.
Bank America CDS down big on the prospect of a mortgage settlement. Market seems to think this will help the banks more than the consumer. I would have to agree.
It's been 3 years since everything bottomed.
Where's the 50% discount on Manhattan prices since March of 2009 that the bears here predicted?
Where's the sub 500 psf on new developments in Long Island City?
I don't see discounts anywhere!
relax. you will.
FLMAOZzzzz... high yields means there are significant risks of default... i.e. a gov't bond yielding 10% means the gov't will default.
Here's another financial bit of financial wisdom, high mortgage rates => low LIC condo prices.
I see dead listings......
"Here's another financial bit of financial wisdom, high mortgage rates "
financial wisdom from w67thstreet??!?!?!
O M G!
Ah, this old thread...
> Where's the 50% discount on Manhattan prices since March of 2009 that the bears here predicted?
The bears didn't predict 50%, that was one, maybe two specific folks (and the one I'm thinking of gave several numbers). Most bears predicted under 25%. Which, if wrong, was probably because it was worse than they thought. Certainly anyone who didn't think it was going down shouldn't be here to "correct" them. You were wrong. Have you actually looked at the numbers?
> I don't see discounts anywhere!
You don't have the internet?
now that qualifies as a classic....from erichoooooooooooo
he is actually celebrating exploding junk yields as though this indicates an improving economy!!
as tho this will get him out from under water on the shore of newtown!!
Another idiot that predicted crashing prices of Manhattan prices since 2009's bottom.
Where's the double dip?
"You don't have the internet? "
I certainly do, but what does having internet got anything to do with discounts?
Prices are UP UP UP since March 2009.
AROD sold his Rushmore units that he bought last year at 5.3 million in the 8 million range.
RENT rising in the city over the past 2 years.
Prices are also rising.
Now for those that got left behind like SomewhereElse and Wbottom/Ubottom.
What do you do?
WHAT DO YOU DO!?!?!?!
Arod is laughing at you. Banked 40% from his purchase last year.
"inflation adjusted prices to be down 50% from peak for 3/4 bdrms"
There's no disputing prices are down - but pretty obvious that those particular numbers are not exactly statistically significant.
> Prices are also rising
ericho, seriously, the internet... try it.
Prices took another leg down last quarter.
And maybe cool it with the insults... especially since you are wrong...
"Prices are UP UP UP since March 2009"
Manhattan overall median Q4 2011 - $855k
2009 median, by quarter - $810k, $850k, $835k, 975k
Calling that UP UP UP is wacky... especially considering that $855k is $812k in 2009 dollars... and we just took a 5% decline Q4 over Q3...
The numbers are even worse when you do it by apartment size. 1 bedrooms are current (median manhattan) lower than any point in 2009...
No SteveF, no ericho... who is left to make the bull case?
there are plenty.. but most keeping quiet
(Reuters) - Jeffrey Gundlach, one of the world's leading bond fund managers, on Friday warned that the rallying U.S. stock and corporate debt markets are highly vulnerable to a major reversal.
"It's an awfully easy decision right now to not be making further investments in risk assets," Gundlach said.
"The pricing of the market has returned to the levels prior to the scales falling from investors' eyes regarding the global financial crisis, and I really don't think that's appropriate," he said.
"When I look at the pricing in the market today, I see a good chance of downside movement of some significance," he said.
He said a decline in stock market volume was a worrying signal. Average daily volume on U.S. exchanges last year was 7.84 billion shares but so far in 2012, average daily trading has been 6.95 billion shares.
Gundlach's investment track record has been very strong. Last year, for example, the DoubleLine Core Fixed-Income fund, Gundlach's multi-sector bond fund which can invest in corporate bonds, mortgage-backed securities, Treasuries, and emerging-market debt, posted returns of 11.5 percent.
Should we listen to Gundlach? If we listened to the other world's leading bond fund manager 2 years ago we would have been wrong about the direction of treasuries.
I've been taking a lot of profits in the last couple weeks. Not sure anything is tanking, but I figuring repeating the incredible gains of the last few years 'aint gonna happen twice.
"No SteveF, no ericho... who is left to make the bull case?"
Everything is up since March of 2009.
If one would have read this thread from the beginning, you'll see who got it right and who got it wrong.
2 years ago..
about 2 years ago
ignore this person
Thumbs Up Thumbs Down
"And Manhattan RE trails it greatly.
You have to be pretty blind to miss that gap... its YEARS long."
We're in a global economy, this correction was vicious across the board. What used to take years, are now taking months. The same might happen on the recovery. Check out housing prices in U.K. and Asia. Deflationary pleasure are starting to dissipate and making room for an re-inflation trade. Don't fight the fed my friends..."
That "re-inflation" trade worked out pretty good. Cash was the WORST investment over this past 25-28 months.
about 2 hours ago
ignore this person
Thumbs Up Thumbs Down
I've been taking a lot of profits in the last couple weeks. Not sure anything is tanking, but I figuring repeating the incredible gains of the last few years 'aint gonna happen twice."
I agree. Sell everything.
"If one would have read this thread from the beginning, you'll see who got it right and who got it wrong."
thanks for noticing!
No worries BSex. I'm under-weight but not out of the market.
Even with the selling, I'm still overweighted... I guess I have to keep selling some more. I thought I was selling big chunks, but one forgets how much its jumped.
Nobody is buying stocks. The rise we've had is Fed engineered. Low interest rates by the Fed encourage companies to borrow and buy-back stock. Individuals are net-sellers.
Jan. 17 (Bloomberg) -- Stocks are getting scarcer in the U.S. for the first time since the bull market began as companies cut share sales to the lowest level since 2006 and buy back equity at the fastest pace in four years.
Amgen Inc., Hewlett-Packard Co. and 1,971 other U.S. companies repurchased $397 billion of stock last year, while they issued $169 billion of new equity, data compiled by Birinyi Associates Inc. and Bloomberg show. The combination reduced the Standard & Poor’s 500 Index divisor, a measure of outstanding shares, by 0.6 percent last quarter, the first drop since March 2009.
>Even with the selling, I'm still overweighted... I guess I have to keep selling some more. I thought I was selling big chunks, but one forgets how much its jumped.
Yeah we get it, you are up so much, you made so much money.
As opposed to the real estate market...which is not fed engineered post the greatest re bubble.....
CHAPEL HILL, N.C. (MarketWatch) — Corporate insiders are now selling their companies’ stock at a rate not seen since late last July.
That’s a scary parallel indeed, since that late-July spike in selling came just days before one of the more painful two-week periods in the stock market in years.
on the theory that corporate insiders — officers, directors and largest shareholders — know more about their firms’ prospects than do the rest of us, it can’t be good news that they are selling at such a heavy pace.
Consider a ratio calculated by Argus Research of the number of shares insiders have sold in the open market to the number that they have bought. Last week, according to the latest issue of Argus’ service, the Vickers Weekly Insider Report, this sell-to-buy ratio stood at 5.77-to-1. And among insiders at companies listed on the New York Stock Exchange, this ratio was even more lopsided at 8.2-to-1.
ean L. P. Brunel, chief investment officer at GenSpring Family Offices, tell me that he was preparing his clients for a sustained period of low investment returns. And further, he is counseling those clients — families with hundreds of millions of dollars — that they may need to spend less or change their estate plan.
HOW IT ENDS Mr. Brunel’s forecast is bleakest in how he believes the environment of low investment returns will end: global hyperinflation to reduce government debt burdens.
“A lot of our clients are worried about the after-effects of this global liquidity glut and what it will be” said Katie Nixon, chief investment officer for personal financial services at Northern Trust. “The world is awash in developed market currencies. You can inflate your way out of it or you can grow.”
As much as everyone and their doormen believe "global hyperinflaion" is coming, one has to wonder if that is the easy trade! If global hyperinflation is on the way, why isn't gold at $5000 or $10000 or oil at $300 or commodities north of where they are, especially the softs ? Truth of the matter is, no one really knows for sure. Therefore, anyone believing they have this figured out is not only kidding themselves but highly delusional. Case in point, Japan has been "reflating" for decades! I don't see "hyperinflation" in Japan. Do you ? Yes, we're different from Japan and it's different this time. Already then.
Actually global hyperinflation is sort of a strawman here. The concern is that the huge increases in money will be incendiary once the economy picks up. We're talking about higher inflation numbers enough to be a problem, but not necessarily hyper-inflation. We may have low growth, but even there we risk stagflation with higher food and energy prices coupled with low wage growth. There's just too much incentive for countries to try to print their way out of deficits and to devalue their way to export growth. The irony is of course all nations cannot simultaneously devalue.
Riverside, the key, as you said, is "once" and base on the data I've seen, not the economic data, but market data, I don't see that on the horizon. Besides, looking at the reflation in Japan, they have gone no where and no one can reflate like the BoJ, not even all the other CBs combined.
Therefore, at least for me, it is easier to envision the stagflation that you mentioned. Probably a more insidious form of stagflation but stag nonetheless, not the hyper that everyone and their doormen tend to believe.
streeteasier, welcome to your new name, or your old new name, or your new old name. Well, whatever it is, welcome.
The cyclically adjusted P/E ratio, which uses 10 years of profits to make the calculation, is about 22, well above its long-term average of about 16. While the current level is lower than at the peaks of 2000 and 2007—one a bubble, the other fueled by easy money—it is about where it was when the stock market peaked in 1966, just before entering 16 years of essentially flat performance.
What value is an average of 10 years of profits?
It’s one of the biggest mysteries on Wall Street. How can stocks be in their fourth year of a bull market and trading activity be so low?
During March, average daily volume in equity shares was at their lowest level since December 2007, according to new data from Credit Suisse. This is the same month that marked the three-year anniversary of the bull market that caused the Standard & Poor's 500 to double from its March 2009 credit-crisis low.
“There’s no way to sugar-coat it: Volumes are down and trending lower,” wrote Ana Avramovic of Credit Suisse, in a note to clients. “A growing preference for other asset classes may be drawing money away from equities.”
Daily equity volume in March was 6.59 billion shares a day, the lowest since a sub-6 billion volume month in December 2007, according to Credit Suisse. (The firm adjusted December 2011’s low figures to account for the holiday-skewed week.)
After two vicious bear markets in a decade, the average investor simply doesn’t trust this market anymore.
“There is no fresh money going into the markets,” said Doug Kass of Seabreeze Partners. “Why should we be surprised the retail investor is not there? We’ve had two huge drawdowns in stocks since 2000, a flash crash two years ago and real incomes are stagnating.”
Corporate profits to plumet
SAN FRANCISCO (MarketWatch) -- Massachusetts has subpoenaed Morgan Stanley MS +0.91% over its handling of sensitive information on Facebook FB -0.58% ahead of the social media website's multi-billion dollar initial public offering, media reports said Tuesday. The state's securities division issued the subpoena following a Reuters report that Morgan Stanley cut its revenue outlook on Facebook just before the IPO and discussed it with select institutional investors.
Zucky did a slippery dippery.
do you represent him?
Facebook did a face plant. The warning sign should have been this wasn't an IPO(the money was long ago raised, most recently via dark pool), this was insiders cashing out at the highest possible price and putting one over on an unsuspecting client.
This keeps you up at night?
A slippery dippery as only billionaires can slipperly dip.
Even lots of folks "in the know" screwed up on Facebook. Folks thinking it might be the next Google just didn't get that the advertising model they live on is a shell of what Google has. The IPO PE was 100 vs. 16 for Google... and for many reasons, you can make the case that Google's should be higher.
Of course you knew better than anyone else, if we ignore your call to buy stocks on May 1.
Took a healthy chunk off the table today. The impetus was more I just did a deed dive into my overall financial situation, and realized that extra risk isn't really worth it at this point, so I essentially lowered my target allocation. Of course, I'm sure if I saw tons of upside I would keep pushing on...
Still have a few SSOs though...
With revenue streams drying up and fewer places to cut costs, corporate America’s outlook for third-quarter earnings is looking grim.
So far, 103 companies in the index have provided guidance for the third quarter. Of those, 80% have guided below Wall Street consensus estimates, according to John Butters, senior earnings analyst at FactSet. That’s the most negative outlook since FactSet began tracking the figures in the first quarter of 2006.
The outlook doesn’t bode well for a market that’s at multi-year highs and will soon be facing added volatility as the November elections and the January “fiscal cliff” come closer.
Adding insult to injury, S&P 500 companies are projected to see earnings drop year-over-year for the first time in 12 quarters. Third-quarter earnings are currently estimated to drop by 2.7% for the S&P 500 as a whole, the worst forecast growth rate over the past 12 quarters, Butters added. At the beginning of the quarter, analysts had been forecasting earnings growth of 1.9%.
U.S. companies are the most profitable in more than 40 years, and some of the best-known stock pickers are divided over how long that will last.
The implication for the stock market is ugly, because it means earnings are unsustainably high,” Grantham’s colleague Ben Inker, GMO’s director of asset allocation, said in a telephone interview. GMO, an investment manager that oversees $93 billion, puts the fair value of the Standard & Poor’s 500 Index at between 950 and 1,000, compared with the 1,158.67 level at which it closed last week.
Thatz why w67 likes sprint. It's got negative earnings.. .funny how a stock can go from $2.40 to $5.75 in 4 months and yet have negative earnings... pls pls pls RIVERSIDER.. you are all knowing of all things cream cheese.. please explain how w67 made $1.2MM in 4 months and should he sell sprint bf S&P hits 950???
GIVEN me something that I can make money on... besides your constant my coop is expensive bitchiness.
The market is predicting higher rates which when discounting losses results in a higher stock price.
I've taken more off the table in the last few weeks than I put in in the past couple years. Can't complain that we took a dip today.
RS, are you rooting for a decline... so you can feel like you were a little less inaccurate in your predictions.
VERY happy with a 30% return this year with all the bears around...
It's kind of a hedge. If the market goes up I make money, If it goes down I claim I was right(kidding)
That said, my allocation percent is small and I haven't committed any significant new money since 2008. I don't like the valuations for the most part, which ticks me off, as when I find a good company it's usually not cheap.
> It's kind of a hedge. If the market goes up I make money, If it goes down I claim I was right(kidding)
Ha. I can't say I haven't thought the exact same way...
I now agree (I didn't before this last runup) that we have gotten a bit frothy. So I took a healthy chunk out over late August / early September. I put in a good amount of new money in 2010, and some in 2011, that and more is pretty much out now. Remember, I was 100%+ invested a few years back (I noted on the board when I was) and I'm back down to a much more modest allocation (something that wouldn't be too far from a basic suggested portfolio). I just have much fewer bonds than the allotment would indicate, keeping things in cash, just because bonds have almost no upside and I fear the downside... but I figure to buy in over time.
RS - if only you had taken my advice to go long BAC and dump your gold, you would be a happy man today. Poor Riversider.
Nah, awful diversification. One pen stroke and the stock is toast.
Should have listened to me... completely diversified, minor leverage, certainly less risk than one stock...
SSO PROSHARES ULTRA S&P 500 PROSHARES (Margin) Acquired 03/09/2009 461.37%
Love this thread.
So many got it wrong, it isn't even funny.
Shocking to see w67th's stance back then - seems he made a complete 180 at one point. More interestingly though, where's stevejhx? So much confidence, so little accuracy...
That would b when nada pushed me into coned. And I realized being morally right doesn't mean the game is forever changed.
But as to RE, w67 will buy when money has value as reflected by 8% mortgages or my condo projects sells out at $2k psf.
Either way ericho's kids are gonna work for my kids.
> So many got it wrong, it isn't even funny.
You mean... uh, you?
"More interestingly though, where's stevejhx? So much confidence, so little accuracy..."
He was so wrong, he was kinda right... you just had to do the opposite of everything he said.