Generational Dynamics Forum - New Site

Higgenbotham wrote: > As noted a few weeks back, the Silents are heavily and
> inappropriately invested in stocks. Altria Group and Phillip
> Morris are probably the kinds of stocks the Silents like to own. A
> 15% decline on a stock yielding 4.3% is going to be quite
> unwelcome to a Silent who has lost over 3 years of yield in one
> day and may have less than 10 more years to live (especially if
> they own a lot of Phillip Morris and look at their stock price
> tonight). One look at that may be enough for a risk averse Silent
> to sell everything in their portfolio.

John wrote: > Continuing with the theme that I've been discussing for the last
> few weeks, the market has been in wild swings the last few weeks,
> down 572 today. As I wrote a couple of weeks ago, since the
> market peaked on January 26, the market has been following a
> similar pattern to the period prior to the 1929 panic.

> The S&P 500 price/earnings ratio [on Friday morning was 24.98].

> http://www.wsj.com/mdc/public/page/2_30 ... dc_h_usshl

> The earnings period is going to start in earnest this week. The
> expectations are an astronomical earnings increase. If those
> astronomical expectations are not met, that could be the trigger.

> One theory is that the October 28, 1929, panic occurred because
> earnings were below expectations. If we want to guess at when
> there might be a panic this year, it would be on April 28,
> 2018.

MarketWatch wrote: > Dow drops over 500 points after 10-year Treasury yield touches 3%

> U.S. stocks accelerated declines in afternoon trade Tuesday, led
> by a selloff in industrials, materials and technology shares.

> The selling pressure came after the 10-year Treasury yield touched
> the psychologically important 3% level for the first time in four
> years, a move that comes as first-quarter earnings season was
> failing to excite investors, despite some strong results.

> While the earnings season remained in full swing, the tone was
> generally negative, with several bellwether stocks slumping
> despite posting numbers that were ahead of analyst forecasts.

> What are markets doing?

> The Dow Jones Industrial Average [1]DJIA, -1.88% slumped 541
> points, or 2.2%, to 23,907. The S&P 500 index [2]SPX, -1.50% fell
> 44 points, or 1.7%. The Nasdaq Composite Index [3]COMP, -1.87%
> declined by 140 points, or 2%, to 6,989.

> Percentage losses were the largest since April 6.

> If the Dow closes in negative territory, that will mark its fifth
> straight negative session, its longest such streak since March
> 2017. The Nasdaq is threatening its fourth straight down day, its
> longest streak since February.

> What is driving the market?

> Trading in the stock market has been heavily influenced by U.S.
> Treasury yields, and that theme re-emerged as the 10-year Treasury
> yield [4]TMUBMUSD10Y, +0.50% [5]touched the psychologically
> important 3% handle on Tuesday and hit a four-year high. Yields
> and debt prices move in opposite directions. The 10-year yield
> subsequently pulled back to trade at 2.979%. Yields and debt
> prices move in opposite directions.

> Earnings were also in focus, with a deluge of high profile
> companies reporting results before the open. The season has so far
> been strong, and more than 80% of the S&P 500 companies reporting
> so far have beaten profit forecasts. While that’s above the 73%
> that beat in the fourth quarter of 2017, better-than-expected
> results often haven’t been enough to lift shares thus far this
> season.

> What are strategists saying?

> “Crossing 3% on the 10-year is something that will certainly raise
> concerns, but at this stage of the cycle, higher yields aren’t
> antithetical to rising stock prices. For the time being I think
> we’re fine, but we’re certainly keeping an eye on the yield curve,
> especially if the Fed becomes more aggressive,” said Bruce McCain,
> chief investment strategist at Key Private Bank. “Ultimately
> earnings remain the primary driver, along with the fact that the
> economy is still in pretty good shape.

> Hussein Sayed, chief market strategist at FXTM, said that “the 3%
> by itself is just a psychological level and not a significant
> threat, but if a break above leads to further selling in Treasury
> bonds, that’s going to be a serious warning signal for equity
> bulls. With a current world running on A.I and algorithms, a
> selloff may look ugly.”

> https://www.marketwatch.com/story/dow-s ... 2018-04-24

Art Cashin on CNBC wrote: > There are a couple of things going on. Number one, for the past
> several days we've broken a series of theoretical support lines,
> moving averages, trend lines, things like that, and you saw that
> accelerate today when we took out yesterday's lows.

> But the primary concern is -- we're maybe 1/3 of the way through
> the earnings season, and 83% of the companies that have reported
> have easily beaten the estimates, and yet the averages are below
> where they were when the earnings season started.

> So it's something other than earnings that has the market very
> upset here. ...

> There is some concern things are very good now, but is this the
> peak. And Caterpillar set that off when they announced that
> things were very good, but there was some concern that the first
> quarter would be the high water mark for the year, and that's what
> caught everyone's attention.

> They slipped from plus territory to negative. and the other thing
> we've got GDP coming up, and that continues to be marked down. At
> one point it was theoretically above 3% [growth], it's now down
> around 2%, there are some people who have it all the way down to
> about 1%. So the market is saying yes, things have been good, but
> what are you going to do for me tomorrow?

Higgenbotham wrote: I am beginning to consider another scenario that nobody else I know of has considered. Typically the stock market doesn't blow off parabolically to this extent, is the best way I can think of to say this. If the extreme parabolic blowoff of January is ignored and the chart is looked at, say, beginning in March, with the high at March 13, then the typical 6 week time window for a crash can still be considered open. I don't consider that scenario high probability but I am open to using bootstrapping as a tool to try to take advantage of it if it materializes.

Higgenbotham wrote:

Higgenbotham wrote: > The way the 6 weeks referred to above works is the crash starts
> about 6 weeks after the high, which if the high is considered to
> be March 13, 6 weeks is today for the approximate start of the
> crash.

WSJ newsletter wrote: > New Worry for Stock Investors: Are Corporate Earnings Peaking?

> Stock investors are confronting an uncomfortable question more
> than nine years into the bull market: is this as good as it gets?

> Signs that the future for companies may not look as rosy as the
> present weighed on the stock market Tuesday as the Dow Jones
> Industrial Average sank 1.7%, marking its fifth-straight day of
> losses, the longest such stretch in more than a year.

> Though stocks began the session higher following a round of
> forecast-beating earnings reports, they reversed course after
> Caterpillar Inc. Chief Financial Officer Bradley Halverson told
> analysts that the company's "outlook assumes that first quarter
> adjusted profit per share will be the high-water mark for the
> year."

> Similarly, 3M Co. topped earnings expectations but lowered the top
> end of its guidance range for sales and profits for the full year
> as the company contends with higher prices for raw materials.

> Both reports underscore a new consideration: The long-awaited
> surge in corporate earnings and broad economic growth, which
> for many years seemed to be a distant hope, now appears to
> have arrived. S&P 500 earnings are expected to grow 17%
> year-over-year in the first quarter, the fastest pace in
> years. While that's good for companies right now, it raises the
> concern that the earnings surge may not last.

> What's more, stocks have plodded higher for years with little
> interruption, which means this moment in many ways appears to be
> already priced into the market. And the surge comes at a
> time when investors are parsing a wide variety of fears, from
> geopolitical concerns to rising inflation.

> On Tuesday, that unnerved stock investors, who are finding that
> strong earnings increasingly aren't enough to push stocks
> higher. 3M fell 6.8% and Caterpillar dropped 6.2%, making them the
> worst performers in the Dow on Tuesday. Together they accounted
> for 172 points of the blue-chip index's 425-point decline.