MARKET HITS FOR BLEIER:
Why has the stock market fallen and it can’t get up?
1. Pullback is a “P/E contracting event” as false and unrealistic growth disappears.
2. Not a fear market but a rational market, finally
3. Bank nightmare we cannot wake up from.
4. Government and consumer confidence is a “slave” to market action
5. Haven’t had a major Bear market since Paul Volker was FED Chairman. Gotta “eat our peas”. QE2’s gains will be erased.
How to “find your bottom” if you’re the stock market
Technically:
1. For over 2 decades, tops take forever to form and bottoms are found quickly. As the financial crisis works through the system, tops will happen quickly and bottoms will be a slow process.
2. Market leadership will finally get hammered as momentum works both ways.
3. The market has had low volume on up days and heavy volume on down days. That will reverse.
Fundamentally:
1. Bank and Sovereign debt must be restructured. Nicholas Brady anyone?
2. Interest rates must normalize, gold must drop and currencies must stabilize.
3. Rely less on the Magic Market Dust of liquidity and more on sector and company fundamentals
hey scotty. i think your fundy #2 might be their hardest hat trick to pull. too many funds and high yield divy funds would get wiped out.most funds hold bonds, and interest rate anything near normal could kill them.
that would be a byproduct of everything else…
thanks scott.
How do you know there won’t be a QE3? That would create more magical market dust. And even if you will argue that it did not improve the economy in round 1 and 2, there is still a way to “sell” a QE3, and it’s not even that difficult to do IMO. So what would happen then, in your view?
Nice job Scott. Wasn’t sure if the “bottoms taking time to form…” idea was a revelation to Macke or not. One would hope not but I couldn’t read his reaction. For a guy (Macke) that is/was “prominent” in the financial media world, I’d hope he was aware of history. Otherwise, its really just all about being the biggest clown on the street, isn’t it?