That is the million dollar question.. So-called bond king Jeffrey Gundlach just mentioned today he thinks we'll retest the March Lows... Who really knows. What's interesting, him being a bond guy, is that the Bond Market seems to have calmed down in the last week or so. Bond markets can often be a clue as to what will happen in the equity market.
What kind of time are we living in when the market drops 410 points today, and we are thankful it wasn't worse ? Lol. I would say we are living in crazy times ! 
Time to flush this quarter away.. This first quarter was the worst ever on record for the markets. My personal portfolio of stocks did worse than the averages, due to a higher concentration of oil stocks, and my one stinker gaming stock (PENN). On to the next Quarter ! 
I dont trust what any guru says because they are not transparent...so Gundy might be long bonds and short the market so he is talking his book here and it benefits him. With the lack of immediate transparency I dont believe any of them. I believe numbers and realities and usually those are wrong because as we know the market is only about cheap cash and flows...one guy will try and .000001 another on the bid/ask so they can make a billion dollars on a trillion transactions. The market only really reaches fair value when someone is caught and has to liquidate OR the bond market has better yielding returns and thus the stock market is not attractive. Outside that its almost always several standard deviations from fair value.
I was watching some tick action today at the end and they were moving the markets like 50-70 points on a tick, on no volume..swinging back and forth. To me this is a sign of a lacking in market liquidity...the players are not actively in on either side unless the markets are moving up then you see the usual pattern...start up, dip down a bit and then back higher and just ebb and flow most of the day moving up up up...then the players are in trying to etch out a few million milking the bid/ask by five decimal places knowing there will not be a shock to knock them out.
Wall, who knows , you might be right in Gundy having nefarious reasons for giving his commentary on another dip. I find these guys interesting to listen to, but I don't take any investment advice on anyone I hear on CNBC. And I'll take it a step further. Stock Analysts and their "buy/sell" recommendations ? Please... They are usually so late to the game that a stock has already "shot up/ gone down" to take that advice seriously. I actually use their signals as a contrarian indicator . Lol.
So, on to today's action... Trump and his team scared the bejeezus out of everybody after the close yesterday, and forecast a 100k-240k death figure here in the U.S. Investors took that information and forecast that this is gonna last longer, and the "bridge loan" congress passed isn't going to be enough.
Those companies in the financial sector, and those with the most stretched balance sheets were taken behind the woodshed . A sample ;
JPM ; -6.3%
C ; -8.6%
RF ; -7.5% (regional bank)
HBAN ; -9.3% (regional bank)
CCL ; -33.1%
BA ; -12.6%
PENN ; -20%
I don't know about you, but it feels like this market has been through more in the last 3 months than in a typical 3-year span! Lol.
The only solution to this is time. Every month that ticks by gets us one month closer to the vaccine. Investors need to get comfortable with the volatility because it's not going away.
Trump will speak about doom and gloom scenarios and a week later he will have turned 180 degrees with optimism. Once he has done that 1000 times, perhaps enough time will have passed for science to solve the problems that Trump's words could not.
Yeah guys.... we are certainly living in unprecedented times. Time will well how this all unfolds. I'll remain a long term investor, and would not be surprised to see this eclipse the -50 % drop in the financial crisis . This is many times worse and yet we are only down -30% at this time.
Spot on Wall, they are discounting and minimizing everything for sure.. One of my favorite shows on CNBC is the halftime report. Almost everyone seems to be talking as though they are throwing out 2020 numbers and already looking forward to 2021. This is not how the investment community is supposed to work ! They are supposed to look at earnings expectations for the next 4 quarters ! Lol. (sarcasm). The market should be down a lot more when we consider the expected earnings over the next 4 quarters for companies. The numbers on so many fronts are going to "bugs bunny" like, something you would see in a cartoon , but understanding this is no laughing matter. I think everyone is acknowledging that Forward looking (12 month) earnings is really futile at this point. Does anyone even need to listen to an earnings call over the next 9 months or so ? Perhaps only to listen to see if they will be in business in 9 months.
To help give this come context, I believe I heard that the S&P 500 p/e ratio (TTM) has bottomed out at around at 10 in prior recessions. Not sure if that is accurate but gives us some idea of where we could go in the near future. Zacks indicates the S&P 500 currently has a trailing-twelve month P/E of 16.15
That is a stunning -35% additional shortfall from today's prices in the S&P 500 if we would assume going back to a 10 p/e handle in a distressed market .
(as reference, The long term average of the index has a P/E of 15.59).
The big spike in oil today is a relevant development. It's a big part of this crisis but is mostly being ignored. The markets are going to bounce around while trending lower in the short run but will be higher in 5 years and significantly higher in 20 years. Of course, there is always the chance of another black swan event in our lifetimes.
Rush. I disagree. If you want stocks valued over the next 4 quarters then many stocks would be priced at zero. Many companies will have negative earnings but we have all seen stocks with negative earnings and negative forward earnings projections that have stock prices that seem overvalued. This is strictly a matter of impermanence so the markets are struggling to find the perfect balance in price that is basically impossible to accurately predict. There will be stocks that stay "overvalued" today based on the perception of a guaranteed snaps that are likely to occur (Disney for example).
My point is that in general the market will discount bad news because the market is not priced based on stocks earnings and balance sheets really...only when there is a better investment alternative are stocks properly priced. Outside that the real way stocks are priced is supply and demand and you can see that in MANY MANY instances...in fact most instances.
How could stocks like AMZN or SHOP or GOOG be priced as they are? Or stocks like TSLA or CMG or even HD? They are not priced on a multiple of price to earnings, that only matters when there is less demand and stocks become cheaper in price. Same goes for energy companies, even with this short to mid term situation the pricing of energy stocks is way off because there is less demand for shares and thus the prices go down..investors want risk and want perceived growth and they will pay what the market requires to own those shares. Same goes for biotech stocks with no earnings or cash, they will sell at massive multiples due to potential and that alone.
The market as it currently sits if there were proper treasury alternatives or bonds of high value, the SPX and DOW should be near or lower than they were in 2008, the NAZ with its higher beta but less earnings risk due to higher margins might be valued higher by 20% or so since this really isnt a tech implosion.
The rest of the SPX and market "market cap" is all demand and there not being an alternative...so the FED and UST have inflated this market due to monetary policy and maybe we do not see fair value unless some leveraged players get nixed and it causes a ripple effect...and that is for sure possible.
That about says it all. Small time investors, like myself, have little alternative to grow their portfolio other than stocks. Remember many years ago people would say, "If I won a million bucks, I'd just put it in the bank & live off the interest." It has been a while since a person could get even a measly 3% interest from a CD. The metric has changed.........we've been forced to invest in the stock market to get any meaningful returns.
Yep and that is intentional by the FED and the Treasury...force people into risk assets to inflate the stock market and enrich the bigger more important folk in society.
Another awful data day and another relative discount of said news. We just upchucked a massive jobs hairball and the market actually went UP to start the day and is marginally lower now...marginally.
Nothing is baked in at all, everything is discounted and minimized as short term issues...no way are we close to any bottom or value level.
My market synopsis for the day-
Jobs number was horrific, worse than any estimate...just horrible. Market opens higher and seems to shrug it off. American Express levers up and moves towards debt covenant ceiling, market not all that bothered.
FED decides to taper bond purchases from 60 to 50...market tanks.
So what drives the markets???
Hey Gamble.. My comments were mostly poking fun at the analyst/investment community that mostly zeroes in on earnings, sales, other metrics to try and value a company over the next 4 quarters. They "should" be looking at this stuff, because that's all they ever do is be so shortsighted on company fundamentals. Like I mentioned to Wall earlier, I'm not a big fan of the stock analyst community and their buy/sell ratings, etc. They can helpful as a contrarian indicator. Even they "get it." I think the descriptions we've used in this thread on the current state of the market is fairly accurate. It is just trading in a vacuum and not tethered to any fundamentals for the foreseeable future , and we can expect the volatility to extend for quite some time..
That's interesting to hear about the Fed taping bond purchases. I don't understand that.. My understanding from earlier , as part of the bailout package, was the Fed would come in and backstop the Investment Grade Bond Market by buying bonds , which I'm sure American Express is part of. That market needs support from the Fed for the foreseeable future. Every company with solid credit out there is working to draw down their credit line to raise cash, and if they all do it at once, the Investment Grade Bond Market would blow up. I remember our earlier discussion on this a few weeks ago. Boeing was the one of the first ones to draw down their credit (back when their credit was more credit worthy).
When the market is trading in a vacuum , every little level of support/release from the Fed is going to push the market accordingly.
But I agree with 50% or more
This didn't get a lot of air over the weekend , but both China and S. Korea had a flare up in cases. What a demoralizing predicament. We are gonna face the same set of challenges they are now facing. They are to be viewed as a leading indicator of sorts, since they went through this madness a good 4-8 weeks ahead of the U.S. I'm really quite shocked the futures markets are up right now.
We've talked earlier in this thread how important a vaccine is to solving this riddle. Until we get there , though, we really need to ramp up the efficacy of treatments like hydroxychloroquine and a z-pac. Treatments... That's the silver bullet we need until a vaccine hopefully comes soon thereafter.
Well the markets are bullish even when they are bearish. Outside of that very very short period of unknown shocked time the markets have been discounting everything and bullish on anything. I do not see a reason for a 5% move given where we are now but the obvious bias is to take this liquidity and margin the crap out of it long the QQQs and SPYs. Down days are not that bad like Friday, they are lightly to moderately bought because the markets are thin and leverage can bounce it easy as we see today.
Even the moronic headlines are funny....oh the markets are up on hopes that the curve is flattening and that we are going back to normal. Its almost assumed that whatever the cure is we take a few pills and all is well. I do not see it that way but do the opposite of my thinking because even though I know the game plan it is so astounding and ridiculous I cant follow it blindly.
I gotta think that is a combination of index flows action and the feeling that a 10 and lower oil is less and less likely, so maybe the worst case isnt going to happen longer term so buy the big names.
I find it SUPER funny how King blabber mouth tried to pull his real estate 101 strong arm move on Putin and it didnt work...thats what happens when you are not dealing with subservient morons like Trump is used to. He thinks he can open his trap and then it is so...whatever he dictates is just going to happen and is the end, he speaks and everyone does. Well Putin is miles ahead and much smarter than Trump, he knows this isnt a screaming match and one person gives in...so his comment about production cuts how the US would need to participate has seen crickets from King yapper and Putin is right...it isnt that the US shale complex gets to do whatever the he!! it wants and the world bows to Trump. If Trump wants to step into an OPEC squabble, one that the US has ZERO involvement in and try to dictate terms, nobody has to listen to a word he says.
Its also quite interesting how the most fragile ego in the universe has said ZIP about how the Saudis are trying to squeeze our fracking monster...where is your twitter account to blast the Saudi establishment? Yeah I thought so....Trump is a fraud and a phony...he only takes the easy shots when it serves his biases and he wont tackle the Saudis because he knows he cannot and it will not work. How about some phony China sanctions on the Saudis Trump?
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