Here’s the joke of the day: Stock Market Turns the Corner as Most Risks are Already Priced In.
“By now, investors priced in all the bad things they could price in: concerns about trade wars, geopolitics, rising rates and even fears that earnings growth peaked. But the economy is still growing and earnings are expected to grow by double digits this year and next,” said Karyn Cavanaugh, senior market strategist at Voya Financial.
“We must keep in mind that the first-quarter earnings have been boosted a lot by a one-time tax windfall. But second-quarter earnings are expected to grow by another 20% even without the windfall but as the underlying corporate tax cuts start to kick in,” Cavanaugh added.
Not Priced In
- Insane valuations
- Mideast war
- China slowdown
- Eurozone slowdown
- Change in attitudes towards stocks
Of those, number 1 and number 5 are standouts.
Mike “Mish” Shedlock
I presume that if all the bad stuff is priced in, so is the good stuff. That’s how markets work. Markets do not see the future, nor do the rest of us generally. Perhaps there are some people who can see further than the rest of us, but they are most likely specialists who will only see a small part, which can easily be overwhelmed by that which they don’t see.
Let us wait for 22nd May when the BEA announces non-financial corporate profits for the first quarter. This wipes away all the spurious gains.
Karyn Cavanaugh’s comments are expected at major market turns and make for a good contrarian indicator.
She didn’t mention the balance on return between stocks and bonds shifting due to interest rates? Is this a blonde joke? 4. How do you keep a blonde in the shower all day?
Hand her a bottle of shampoo that says “lather, rinse, repeat
That my favorite indicator as well. Here in CA the economy is off the charts! Next though you have to analyze the traffic. Lots of PUs with ladders and tools? Not so much. Semi’s? Not really. Still a lot of one person one car, so no carpooling. I suppose a lot of people couldn’t find housing and are taking on long commutes.
“second-quarter earnings are expected to grow by another 20%”. If that kind of growth is priced in, what could go wrong?
Get in your car and try driving anywhere- traffic is horrendous; the economy is booming.
… and she was saying the same things just as the market peaked in 2007. Stawks are cheap!
Boomers will leave stuff behind. Property etc. Deflationary supply of stuff but that can be increasingly taxed too. I suspect change will come in that area, or, although deflationary, the wealth transfer can have a beneficial impact somehow.
Looking further into the future, things will be really bleak when Boomers start dying in large numbers. They are (and will be) the last moneyed American generation. Once they’re gone, the system will consist almost entirely of bankster algos trading with each other all day.