Happy Monday stock cucks.
Andrew Sheets, chief cross-asset strategist at Morgan Stanley, is out with a note tonight warning investors that the recent correction that was eradicated over the past week of rallies was merely an appetizer, an opening salvo into a sequence of events that poses to lay waste to the American stock market.
The motivation?
Higher rates effectively removes the sweet tit of low interest rates and leaves stocks naked and bare to face thw easterly winds by itself — dependent on earnings growth instead of multiple expansion.
The U.S. stock market only had a taste of the potential damage from higher bond yields earlier this year, with the biggest test yet to come, according to Morgan Stanley.
Via Bloomberg:
“Appetizer, not the main course,” is how the bank’s strategists led by London-based Andrew Sheets described the correction of late January to early February. Although higher bond yields proved tough for equity investors to digest, the key metric of inflation-adjusted yields didn’t break out of their range for the past five years, they said in a note Monday.
“It’s when growth softens while inflation is still rising that returns suffer most,” the strategists wrote. “Strong global growth and a good first-quarter reporting season provided an important offset. We remain on watch for ‘tricky handoff’ in the second quarter, as core inflation rises and activity indicators moderate.”
As a bear, what you want to see is the delicate woven seams begin to unravel. The Trump economic expansion plans ruined, Mueller to gain power and decimate the Trump presidency — a whole litany of events that pushes America into the toilet bowl of democratic branded marxism — full retarded healthcare and all.
Under a scenario of weakening GDP growth and higher rates, markets should ‘courrect’ by a solid 30%.
Bad news for bearshitstains, none of that nonsense is bound to happen. In one year henceforth, Robert Mueller will be rotting away in a dank prison cell and Barack Obama will be humiliated alongside his retarded portrait — forced to live out the rest of his days isolated in a Kenyan work camp.
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Started by /ZB from 143’16 every other tick all the way down to 142. Easy money.
*buying
Went flat at 143’28.
Nobody gives a rat’s ass about your obscure “investments”.
Nobody on this blog, you mean. That’s probably true because you are all losers with less than two commas worth of “capital” (or less) to “invest” on Scottrade or whatever shit-tier brokerage that gives a rat’s ass about having you as valued customers.
I must say I’m enjoying this market quite alright.
For a big correction, we need a catalyst to blame it on. This time it will be massive amounts of government debt (they will begin to matter for once) fueled by Trump’s economic plan backfiring. His tax cuts are great, but increased spending will turn against him unless the economy is stellar. Tax cuts should have gone hand in hand with a reduction in government spending.
Now we are in a position where fund managers cash balance on hand is below 4.5% and has been falling for the past 6 months. Simply put, they no longer hold the $$ to buy the dip. Not saying a large correction is imminent in the next month, however some of the pieces are falling in place.
On a side note, how’s the pooch doing? 🙂
Agree with everything with one caveat.
“Tax cuts should have gone hand in hand with a reduction in government spending.” This is true, but what can be cut without lowering GDP?
Ackknowledging the fact that the wealthy managed to “secure” the income before the tax man, any spending cut combined with the tax cuts as passed would have a strong, *immediate* net decrease in income/benefits for the bottom 50%. In a consumer economy, that would crunch the economy and stock market.
I would propose lowering the military budget which is multiple times bigger than it needs to be. This will force military personnel to join the private sector, where they will actually produce real goods and services which will increase GDP.
Powell’s dovish hike will alleviate the volatility and cool rates for a bit. However, theres a lot of time to get chopped up between now and then.
Dovish hike? Hiking rates is not dovish bro
Such cockteaser – Robert Mueller will be rotting away in a dank prison cell and Barack Obama will be humiliated alongside his retarded portrait — forced to live out the rest of his days isolated in a Kenyan work camp.
i wish, and hope
Rates are nowhere near ‘high’ yet. Asinine.
they are on their way to 3 and more
Sold OSTK from fully margined account and bought SOXS and LABD.