Rick Rieder, BlackRock.com’s CIO of global fixed income, discusses his outlook on technology stocks and why he owns Tesla $TSLA. FoxBusiness.com video published Oct 12, 2018.
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| $TSLA |
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Showing posts with label expectations. Show all posts
Showing posts with label expectations. Show all posts
2018-10-15
BlackRock’s Rick Rieder: Technology Stocks Are Not Overvalued (video)
Technology stocks aren’t overvalued: BlackRock’s Rick Rieder
Rick Rieder, BlackRock.com’s CIO of global fixed income, discusses his outlook on technology stocks and why he owns Tesla $TSLA. FoxBusiness.com video published Oct 12, 2018.
"The BlackRock GPS signals that G7 growth remains solid and above-trend. The gap between the GPS and consensus expectations has widened slightly over the past month, suggesting that scope for upside growth surprises remains in coming quarters, particularly in the US"--Blackrock.com.
Tweets by RickRieder
Rick Rieder, BlackRock.com’s CIO of global fixed income, discusses his outlook on technology stocks and why he owns Tesla $TSLA. FoxBusiness.com video published Oct 12, 2018.
Tweets by RickRieder
2016-12-05
MacroView: EU Teeters on 'No' Vote In Italy; Trump Effect & Expectations
MacroView: Domain Mondo's weekly review of macro economic and investing news
1. The EU Teeters; 2. Trump Effect & Expectations; 3. Why Hillary Lost.
1. The EU Teeters
Feature • The European Union (EU) teeters on the 'No' vote win in the referendum in Italy on Sunday (Nov 4), and the resignation of Italian Prime Minister Renzi. Austria rejected anti-immigrant populist Hofer (Freedom Party) in its Presidential Election on Sunday, but "[w]hile the runoff for the [Austrian] presidency was close, polls in recent weeks have shown that Mr. Hofer’s Freedom Party remains Austria’s most popular by a large margin. The party drew the support of 35% of those surveyed in a Gallup poll last month, well ahead of the second-place Social Democrats with 27%"--WSJ.com.
Political instability risks in Italy, Europe's fourth largest economy, have already triggered market reaction before the vote “The Italian banking industry has huge problems linked to their businesses, not to the referendum,” said Francesco Confuorti, the CEO of Advantage Financial SA, a Milan-based investment firm. "This is a resolvable situation, but we shouldn’t expect that it will be resolved," said Pitt Miller, analyst at Janus Capital Group in Denver. "That is so utterly frustrating."--Bloomberg.com
Why the Italian referendum matters:
Video above published by FT.com Nov 29, 2016.
The European Central Bank (ECB) is worried about political uncertainty risk within the eurozone, with the constitutional referendum in Italy on Sunday and elections in France and Germany in 2017. The worst-case scenario could reignite the 2009 eurozone debt crisis, says the ECB, which has also warned that some stock markets could be heading for sharp falls. "Valuation measures... are in some regions hovering at levels which, in the past, have been harbingers of impending large corrections."--BBC.com. See ECB Financial Stability Review, November 2016 (pdf).
Brexit, Trump, Le Pen and the rise of the right: the anger goes global | Independent.co.uk: "Across the world, rage against the ‘liberal elite’ fuels reactionary, populist movements ..."
Just days after Germany's Angela Merkel announced she would seek a fourth term as German Chancellor in September, 2017, she said she expects to deport 100,000 migrants from Germany next year in a sharp reversal of policy. The Chancellor, who welcomed “no upper limit” of migrants from the Middle East, Asia and Africa last year, said Saturday, 27 Nov 2016: “It can not be that all the young people from Afghanistan come to Germany. The most important thing in the coming months is repatriation, repatriation and once more, repatriation."--Breitbart.com. According to Handelsblatt.com, Merkel said she expects a third of the deportations to be forced or compulsorily, and around 60,000 migrants to return to their home nations via voluntary repatriation programs.
1. The EU Teeters; 2. Trump Effect & Expectations; 3. Why Hillary Lost.
1. The EU Teeters
Feature • The European Union (EU) teeters on the 'No' vote win in the referendum in Italy on Sunday (Nov 4), and the resignation of Italian Prime Minister Renzi. Austria rejected anti-immigrant populist Hofer (Freedom Party) in its Presidential Election on Sunday, but "[w]hile the runoff for the [Austrian] presidency was close, polls in recent weeks have shown that Mr. Hofer’s Freedom Party remains Austria’s most popular by a large margin. The party drew the support of 35% of those surveyed in a Gallup poll last month, well ahead of the second-place Social Democrats with 27%"--WSJ.com.
Political instability risks in Italy, Europe's fourth largest economy, have already triggered market reaction before the vote “The Italian banking industry has huge problems linked to their businesses, not to the referendum,” said Francesco Confuorti, the CEO of Advantage Financial SA, a Milan-based investment firm. "This is a resolvable situation, but we shouldn’t expect that it will be resolved," said Pitt Miller, analyst at Janus Capital Group in Denver. "That is so utterly frustrating."--Bloomberg.com
Why the Italian referendum matters:
Video above published by FT.com Nov 29, 2016.
The European Central Bank (ECB) is worried about political uncertainty risk within the eurozone, with the constitutional referendum in Italy on Sunday and elections in France and Germany in 2017. The worst-case scenario could reignite the 2009 eurozone debt crisis, says the ECB, which has also warned that some stock markets could be heading for sharp falls. "Valuation measures... are in some regions hovering at levels which, in the past, have been harbingers of impending large corrections."--BBC.com. See ECB Financial Stability Review, November 2016 (pdf).
Brexit, Trump, Le Pen and the rise of the right: the anger goes global | Independent.co.uk: "Across the world, rage against the ‘liberal elite’ fuels reactionary, populist movements ..."
Just days after Germany's Angela Merkel announced she would seek a fourth term as German Chancellor in September, 2017, she said she expects to deport 100,000 migrants from Germany next year in a sharp reversal of policy. The Chancellor, who welcomed “no upper limit” of migrants from the Middle East, Asia and Africa last year, said Saturday, 27 Nov 2016: “It can not be that all the young people from Afghanistan come to Germany. The most important thing in the coming months is repatriation, repatriation and once more, repatriation."--Breitbart.com. According to Handelsblatt.com, Merkel said she expects a third of the deportations to be forced or compulsorily, and around 60,000 migrants to return to their home nations via voluntary repatriation programs.
Alone and unpopular, France's President Hollande won't run for re-election in April and May, 2017. Les Républicains party candidate François Fillon and National Front candidate Marine Le Pen are among the favorites in voter surveys (see chart below). See also: Growing conservative view in France leaves future unclear for country, continent | TheGlobeandMail.com.
Hollande's Decision in France Not to Seek Re-election Reflects Broader Upheaval: Hollande is the first President in modern French history not to run for re-election. In the Netherlands, far-right leader Geert Wilders is polling strongly ahead of the 2017 elections.
2. Trump Effect & Expectations
Feature • Trump Effect & Expectations: Surging Stock Markets, Rising Consumer Confidence, Saving Jobs. The Trump Effect: Is this a Nixon-goes-to-China moment? | FTSERussell.com:
With Trump's unprecedented action, as President-elect, and success, in saving 1000+ jobs in Indiana (the same jobs, the loss of which President Obama said in June "nothing could be done"), together with the post-election surge on U.S. stock markets, and rise in consumer confidence since November 8, might it be prudent for the Trump Transition Team to begin proactively managing expectations?
Russell 2000's longest win streak since February 1996 extends to 14 sessions | MarketWatch.com: "... it suggests investors' appetite for risk has increased"--the Russell 2000 Index (above) is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index (average market cap for the Russell 2000 members is $1.82 billion, according to FTSERussell.com), while the average market cap for Dow (below) components is more than 100 times that at $183.98 billion, according to an analysis of FactSet.com data.
But Are Rising Expectations Excessive and Markets Due For A Correction?
Blackstone CEO on Job Growth Under President Trump (Nov 16, 2016, video above): Stephen Schwarzman, CEO and Co-Founder of The Blackstone Group, shared his view with WSJ.com financial editor Dennis Berman that a reduction in the regulatory burden in Washington under President-elect Donald Trump will lead to increased economic growth.
OECD says Trump election points to US growth boost: President-elect Donald Trump's big-spending plan and tax cuts are expected to help double the US economic growth rate by 2018, the Organisation for Economic Cooperation and Development (OECD) said in its semi-annual report, forecasting the US economy will grow by 2.3 percent in 2017 and 3.0 percent in 2018, revising OECD's earlier lower forecast, and contrasted against this year's gross domestic product growth of 1.5 percent. The Paris-based OECD also said global growth will benefit if the US president-elect's spending and tax plans boost domestic investment and consumption. See Donald Trump’s infrastructure plans win backing from OECD | FT.com and OECD Lifts Global Growth Forecasts on Expected Trump Stimulus | Bloomberg.com.
Chairman of Top Nordic Bank Predicts Better Times Under Trump: Bjorn Wahlroos, the chairman of Nordea Bank AB, said in an interview in Stockholm, that Donald Trump’s election win is good news for the U.S. economy, thanks to Trump's pledge to deliver tax cuts and deregulation.--Bloomberg.com.
Bloomberg.com also reported that with stocks at record highs, Nicholas Colas, chief market strategist at Convergex, sees the makings of a multi-year rally for stocks:
Steven Mnuchin Going to Issue 50 or 100-Year Treasurys? President-elect Donald Trump‘s choice for Treasury Secretary is already moving markets, saying “we’ll look at potentially extending the maturity of the debt because eventually we are going to have higher interest rates and that is something this country is going to need to deal with,” adding, he may look at issuing debt that doesn’t come due for as long at 50 or 100 years, among other options (the longest-term U.S. Treasury bonds are currently 30-year bonds)--WSJ.com.
Even conservative economist and Trump economic adviser Stephen Moore is capitulating to the largely non-ideological, populist economic agenda of Trump--Moore traveled around the Rust Belt states in support of Trump during the campaign, and after witnessing Trump’s stunning victory, he told Republican House members--
Other post-election news:
• About that "fake news" and "garbage" published in the Washington Post, read The Propaganda About Russian Propaganda | NewYorker.com.
• WaPo clickbait: Trump’s Pennsylvania lead shrinks | WashingtonPost.com--recounts underway in Pennsylvania, Michigan, and Wisconsin are not expected to change the outcome in any of the three states--a fact the Washington Post conveniently buried near the end of its article.
• CNN Apologizes to Trump after CNN Crew caught joking about his plane crashing:“An unfortunate and inappropriate remark was made by one of our producers off camera yesterday," CNN said in a statement. "We have apologized to the Trump transition team, and the producer has been disciplined.”--HollywoodReporter.com
3. Why Hillary Lost
• One More Thing--Nobody likes sore losers--Clinton aides blame loss on everything but themselves | POLITICO.com: "... In interviews with close to a dozen top Clinton allies and former operatives, who did not want to publicly criticize the losing campaign or candidate, many expressed a deep frustration that the party had pinned its hopes on a divisive establishment candidate ... 2016 was ultimately a change election. The issues were crystal clear as early as January 2015 ..." See also Hillary Clinton’s Expectations, and Her Ultimate Campaign Missteps | NYTimes.com. Why Hillary lost:
Above: 2016 US Presidential Election Map By County & Vote Share: Clinton (Dem) Blue; Trump (Rep) Red. The map explains why Clinton lost the election despite winning 48% of the reported popular vote to Trump's 46.3% according to the latest results. Clinton won only 232 electoral votes, while Trump won 306 electoral votes (270 electoral votes are needed to win the election). Why the disparity in electoral votes when the popular vote was so close? Clinton's popular vote was very concentrated in only a few states whereas Trump’s votes came from a wide enough geographic area to capture the Electoral College. Overall, Trump won approximately 2,600 counties to Clinton’s 500, or about 84% of the geographic United States. Clinton won 88 of of the 100 largest counties (including Washington D.C.), but the Electoral College system, established by Article Two of the United States Constitution, rewards a candidate who has a wide geographic appeal among the fifty states. For example, Trump spent no time nor money in California during the general campaign, allowing Clinton to "run up" the vote there and win the state by a margin of 2-to-1, a winning margin of 4,016,025 votes. In fact, take away Hillary's winning margin in just California (4,016,025), and Trump wins the national popular vote by 1,708,876 votes.
But Trump, instead of wasting time and money in California (Clinton overall had more than twice the money Trump did, thanks to her "friends" in Hollywood, Washington, New York, and Silicon Valley), focused on winning the states that would deliver him an electoral vote victory. Meanwhile, the Clinton campaign believed the "fake news" that the establishment media and their pollsters were spewing, that Hillary was a shoo-in to win the election, she didn't even need blue-collar workers' votes in the Rust Belt, and as a result she never campaigned in Wisconsin, abandoned traditional working-class Democratic Party constituencies in places like Pennsylvania and Michigan, and instead, wasted time and money campaigning in places like Texas and Georgia. You know the rest. (Also note that Alaska in gray above, voted for Trump.)
What will haunt Democrats for years to come, is the fact that Hillary could have won the Presidential election had she just not lost Pennsylvania, Michigan, and Wisconsin, three traditionally Democratic states in Presidential elections (Obama won all 3 in both 2008 and 2012). Yes, Hillary lost Florida, North Carolina, and other states where she actually campaigned and spent money, but she didn't need Florida, North Carolina, or any of those other states she lost, had she just held the Blue Wall states of PA, MI, & WI. In the end, Hillary won the money race and she had the media establishment in her corner, as well as Wall Street, K Street, Silicon Valley, and Hollywood, but she lost the election because her campaign became over-confident, even arrogant, and felt "entitled"--those same things that led to her email and Clinton Foundation pay-to-play scandals--that's why Hillary and her Clinton campaign organization, and Clinton supporters, were in such shock and disbelief on election night. Hillary couldn't even emotionally handle showing up to concede at the Javits Center election night, but instead, sent John Podesta who told everybody to "go home."
-- John Poole, Editor, Domain Mondo
feedback & comments via twitter @DomainMondo
Follow @DomainMondo
DISCLAIMER
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| French Presidential Election Poll - First Round If Valls Is Socialist Candidate |
"We're moving to new times, and very different times ... something is changing, and it means we are going to have new leaders," said Philippe Moreau Defarges of the Paris-based Institute of International Relations--VOAnews.com.
________________
2. Trump Effect & Expectations
Feature • Trump Effect & Expectations: Surging Stock Markets, Rising Consumer Confidence, Saving Jobs. The Trump Effect: Is this a Nixon-goes-to-China moment? | FTSERussell.com:
"On November 8, Donald Trump was elected President of the United States. As the election returns came in, US equity futures plummeted, pointing to the possibility of a sharp decline in equities when the market opened the next day. But when the market actually opened on November 9, something very different occurred: US stocks soared ..."
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| Russell 2000 Index UP 10% since Nov 8 (source: google.com) |
Russell 2000's longest win streak since February 1996 extends to 14 sessions | MarketWatch.com: "... it suggests investors' appetite for risk has increased"--the Russell 2000 Index (above) is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index (average market cap for the Russell 2000 members is $1.82 billion, according to FTSERussell.com), while the average market cap for Dow (below) components is more than 100 times that at $183.98 billion, according to an analysis of FactSet.com data.
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| Dow Jones Industrial Average (DJIA) up 5% since Nov 8 (source: google.com) |
Blackstone CEO on Job Growth Under President Trump (Nov 16, 2016, video above): Stephen Schwarzman, CEO and Co-Founder of The Blackstone Group, shared his view with WSJ.com financial editor Dennis Berman that a reduction in the regulatory burden in Washington under President-elect Donald Trump will lead to increased economic growth.
OECD says Trump election points to US growth boost: President-elect Donald Trump's big-spending plan and tax cuts are expected to help double the US economic growth rate by 2018, the Organisation for Economic Cooperation and Development (OECD) said in its semi-annual report, forecasting the US economy will grow by 2.3 percent in 2017 and 3.0 percent in 2018, revising OECD's earlier lower forecast, and contrasted against this year's gross domestic product growth of 1.5 percent. The Paris-based OECD also said global growth will benefit if the US president-elect's spending and tax plans boost domestic investment and consumption. See Donald Trump’s infrastructure plans win backing from OECD | FT.com and OECD Lifts Global Growth Forecasts on Expected Trump Stimulus | Bloomberg.com.
Chairman of Top Nordic Bank Predicts Better Times Under Trump: Bjorn Wahlroos, the chairman of Nordea Bank AB, said in an interview in Stockholm, that Donald Trump’s election win is good news for the U.S. economy, thanks to Trump's pledge to deliver tax cuts and deregulation.--Bloomberg.com.
Bloomberg.com also reported that with stocks at record highs, Nicholas Colas, chief market strategist at Convergex, sees the makings of a multi-year rally for stocks:
"... in reality the whole framework of market expectations has shifted, and rapidly at that. Investors will have to adapt to a world where the companies they own do some investing as well rather than hand back all their earnings in buybacks and dividends. And sectors like Financials and Industrials, long forgotten, may once again show a cyclical resilience out of pace with their near term fundamentals. One thing is for sure: the recent rally is more than just an uptick in asset prices ..."Goldman Sachs Says Trump's Presidency Will Benefit Stocks in Almost Every Sector: "... Goldman certainly isn't the first to hail the potential benefits of a Trump presidency. Dubravko Lakos-Bujas and Marko Kolanovic, quantitative analysts at JPMorgan Chase and Co., also wrote that many of Trump's policies would be "pro-growth," even while uncertainty about specifics remains high. They wrote this week that if the campaign promises that have the potential to stimulate growth get implemented, the S&P 500 could see as much as $20 in additional earnings-per-share growth over the next few years ..."--Bloomberg.com Nov. 30, 2016.
Steven Mnuchin Going to Issue 50 or 100-Year Treasurys? President-elect Donald Trump‘s choice for Treasury Secretary is already moving markets, saying “we’ll look at potentially extending the maturity of the debt because eventually we are going to have higher interest rates and that is something this country is going to need to deal with,” adding, he may look at issuing debt that doesn’t come due for as long at 50 or 100 years, among other options (the longest-term U.S. Treasury bonds are currently 30-year bonds)--WSJ.com.
Even conservative economist and Trump economic adviser Stephen Moore is capitulating to the largely non-ideological, populist economic agenda of Trump--Moore traveled around the Rust Belt states in support of Trump during the campaign, and after witnessing Trump’s stunning victory, he told Republican House members--
"It [Trump's campaign] turned me more into a populist ... having spent the last three or four months on the campaign trail, it opens your eyes to the everyday anxieties and financial stress people are facing ... I’m pro-immigration and pro-trade, but we better make sure as we pursue these policies we’re not creating economic undertow in these areas." Referring to Trump’s proposed massive infrastructure program, Moore, who has worked for the ultra-conservative Heritage Foundation, said,“I don’t want to spend all that money on infrastructure, I think it’s mostly a waste of money but if the voters want it, they should get it. If Trump says build a wall then he should build a wall. If Trump says renegotiate TPP [the Trans-Pacific Partnership trade deal], he should renegotiate TPP.”--TheHill.com.Even President Obama briefly stepped aboard the Trump Train post-election, saying in Athens: "The global path of globalization demands a course correction ..."--PRI.org.
Other post-election news:
• About that "fake news" and "garbage" published in the Washington Post, read The Propaganda About Russian Propaganda | NewYorker.com.
• WaPo clickbait: Trump’s Pennsylvania lead shrinks | WashingtonPost.com--recounts underway in Pennsylvania, Michigan, and Wisconsin are not expected to change the outcome in any of the three states--a fact the Washington Post conveniently buried near the end of its article.
• CNN Apologizes to Trump after CNN Crew caught joking about his plane crashing:“An unfortunate and inappropriate remark was made by one of our producers off camera yesterday," CNN said in a statement. "We have apologized to the Trump transition team, and the producer has been disciplined.”--HollywoodReporter.com
3. Why Hillary Lost
• One More Thing--Nobody likes sore losers--Clinton aides blame loss on everything but themselves | POLITICO.com: "... In interviews with close to a dozen top Clinton allies and former operatives, who did not want to publicly criticize the losing campaign or candidate, many expressed a deep frustration that the party had pinned its hopes on a divisive establishment candidate ... 2016 was ultimately a change election. The issues were crystal clear as early as January 2015 ..." See also Hillary Clinton’s Expectations, and Her Ultimate Campaign Missteps | NYTimes.com. Why Hillary lost:
 |
| Map created by Magog the Ogre via Wikimedia |
But Trump, instead of wasting time and money in California (Clinton overall had more than twice the money Trump did, thanks to her "friends" in Hollywood, Washington, New York, and Silicon Valley), focused on winning the states that would deliver him an electoral vote victory. Meanwhile, the Clinton campaign believed the "fake news" that the establishment media and their pollsters were spewing, that Hillary was a shoo-in to win the election, she didn't even need blue-collar workers' votes in the Rust Belt, and as a result she never campaigned in Wisconsin, abandoned traditional working-class Democratic Party constituencies in places like Pennsylvania and Michigan, and instead, wasted time and money campaigning in places like Texas and Georgia. You know the rest. (Also note that Alaska in gray above, voted for Trump.)
What will haunt Democrats for years to come, is the fact that Hillary could have won the Presidential election had she just not lost Pennsylvania, Michigan, and Wisconsin, three traditionally Democratic states in Presidential elections (Obama won all 3 in both 2008 and 2012). Yes, Hillary lost Florida, North Carolina, and other states where she actually campaigned and spent money, but she didn't need Florida, North Carolina, or any of those other states she lost, had she just held the Blue Wall states of PA, MI, & WI. In the end, Hillary won the money race and she had the media establishment in her corner, as well as Wall Street, K Street, Silicon Valley, and Hollywood, but she lost the election because her campaign became over-confident, even arrogant, and felt "entitled"--those same things that led to her email and Clinton Foundation pay-to-play scandals--that's why Hillary and her Clinton campaign organization, and Clinton supporters, were in such shock and disbelief on election night. Hillary couldn't even emotionally handle showing up to concede at the Javits Center election night, but instead, sent John Podesta who told everybody to "go home."
-- John Poole, Editor, Domain Mondo
feedback & comments via twitter @DomainMondo
Follow @DomainMondo
DISCLAIMER
2016-02-08
What Happened to LinkedIn? $LNKD Stock Down 58% Since Nov 10
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| LinkedIn 1-year stock chart (NYSE:LNKD) (source: google.com) |
"We will now end the call with our outlook for the first quarter and full year. For the first quarter, we expect: revenue of approximately $820 million, representing 29% percent growth. Adjusted EBITDA of approximately $190 million, a 23% margin. And Non-GAAP EPS of approximately $0.55 per share. For the full year, we expect: Revenue between $3.6 billion and $3.65 billion, a range of 20% to 22% year-over-year growth. This includes a 2% FX headwind. It also incorporates removing $50 million of potential Bizo revenue contribution in 2016. Adjusted EBITDA of between $950 million and $975 million, a 27% margin at the midpoint. And non-GAAP EPS of approximately $3.05 to $3.20 per share." --LinkedIn (LNKD) Jeffrey Weiner on Q4 2015 Results - Earnings Call Transcript | Seeking Alpha
So what's wrong? LinkedIn: Why So Surprised At The Drop? | Seeking Alpha: "... the investment community is starting to realize that the 30%+ growth rates are gone and that the lower growth does not support the current stock price. Hence the correction. LinkedIn is not Facebook (FB) ... Growth is slower and margins are lower."
Stocks in the whole tech sector have seen losses this year, as investors continue to closely examine "Internet valuations." See: Tech-stock wreck destroys $529B this year and Bye-bye Internet bubble 2.0 (USA Today). There are, of course, other views of what happened to LinkedIn, one of which you can read here and here.
Domain: LinkedIn.com
Our CEO Jeff Weiner & CFO Steve Sordello will be co-hosting our Q4 2015 earnings call at 2pm PT today. Join us. https://t.co/W6IvALcFdy— LinkedIn (@LinkedIn) February 4, 2016
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DISCLAIMER
2015-08-27
Global Markets Addicted to Central Bank and Government Manipulation
Video above--Europe Stocks Rebound as Chinese Selloff Halts--August 27, 2015: European stocks joined a global relief rally as Chinese shares snapped a five-day losing streak. Shares rose in Europe and Asia after the biggest advance in U.S. stocks in four years on Wednesday helped restore some appetite for riskier assets. Developing-nation currencies rebounded from a record low and a surge in the last hour of trading in Shanghai sent Chinese stocks to their biggest gains in seven weeks.
The REAL Liquidity Trap: Global Markets are now addicted to Central Banks and Governments intervening and manipulating everything from interest rates to currencies to equities (stocks).
Want proof?
Seeking Alpha: "Shares across the globe are skyrocketing after Wall Street cracked a six-day losing streak with its best rally in nearly four years. With momentum turning to the upside, investors seem to be covering their positions, while long-term bulls snap up perceived bargains. The rebound is also being attributed to falling expectations the Fed will soon raise interest rates. On Wednesday, NY Fed President William Dudley said a September hike seemed "less compelling" given recent global economic uncertainty."
China Intervened Today to Shore Up Stocks Ahead of Military Parade - Bloomberg: "China’s government resumed its intervention in the stock market on Thursday and has been cutting holdings of U.S. Treasuries this month to support the yuan, according to people familiar with the matter. Authorities want to stabilize equities before a Sept. 3 military parade celebrating the 70th anniversary of the World War II victory over Japan, said two of the people, who asked not to be identified because the move wasn’t publicly announced. Treasury sales allow policy makers to raise dollars needed to bolster the yuan after a shock devaluation two weeks ago, according to different people familiar with the matter. China revived its equity purchases after the government’s absence from the market earlier this week contributed to the biggest two-day selloff since 1996. Under a new exchange-rate regime announced Aug. 11, the central bank relies on intervention to manage the yuan instead of its daily fixing. China’s surprise policy shifts have jolted markets worldwide as investors struggle to gauge their impact on the world’s second-largest economy."
China’s Stocks Surge in Late Trading to Halt Five-Day Plunge - Bloomberg: "Stocks failed to sustain gains on Wednesday after the central bank cut interest rates and reduced the amount of required reserves for banks. The index tumbled 42 percent from its mid-June peak through Wednesday to erase more than $5 trillion of value as margin traders closed out bullish bets and concern deepened that valuations are unjustified by the weak economic outlook. Stocks on mainland bourses trade at a median 49 times reported earnings, according to data compiled by Bloomberg. That’s the most among the 10 largest markets and more than three times the 18 multiple for the Standard & Poor’s 500 Index."
Forget the headlines--nothing has changed from a few days ago--governments and central banks are intervening and actively manipulating global markets, even in secret, unannounced ways (see China stories above). This never ends well.
But when will it end? Probably when a sufficient number of market investors lose confidence in central banks' and governments' ability or willingness to continue to manipulate. Right now, enough "market investors" are still willing to be "market speculators" -- in effect placing casino-like bets on future "Fed policy" and "Chinese government manipulation." How high will valuations go in this giant global Ponzi-like scheme?
The "smart money" in China has already abandoned Chinese stock markets. Wealthy Chinese are moving money out of China. But the Chinese masses, and the rest of the world, are still "playing along" for now. When will expectations and speculations meet reality?
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