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I must admit, I'm puzzled by this market. I keep waiting for a correction, but it goes higher. Did we just skip over the 7 year correction?
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The market - higher and higher
- Thread starter Mike
- Start date
Would be nice to know 
The low borrowing rates, Europe still not on high growth rates and, for the US, Trumps plans (until he might piss off some countries and understand how connected the world is...it is not the cold war anymore) have probably pushed the correction a bit.
I'm still on a very few specific stocks so still positive....
The low borrowing rates, Europe still not on high growth rates and, for the US, Trumps plans (until he might piss off some countries and understand how connected the world is...it is not the cold war anymore) have probably pushed the correction a bit.
I'm still on a very few specific stocks so still positive....
cmalak
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Markets are pricing in every pro-growth fiscal stimulus policy (tax cuts, deregulation, and infrastructure spend) that Trump has made despite not knowing the details associated with those policies and without layering in the likelihood of some major obstacles in passing them in the house, especially as it relates to spending-oriented stimulus on infrastructure spend given a fiscally-conservative Republican majority.
Plus the market is choosing to ignore the potential negative impact on trade Trump's protectionist, America first stance could result in, never mind any major foreign policy screw up he may cause with his shoot from the hips style of diplomacy (One China policy debacle in last few months which he finally reversed on Thurs, etc...).
I think market has flat-lined really in last 2 months with much of the gains happening from election to mid-Dec and now market is consolidating those gains as it waits for details on various policies. so still in honeymoon phase with glass half-full mentality. If there are major delays in enacting his tax, dereg, and spending policies and there are a few intl relations blunders, we could easily see a shallow 5%-8% correction, which would be a nice re-entry point for those on the side lines.
I think we are going to have another 18-24 months before a recession-led serious correction of 25%+ because we have to get to a point where economy is heating up, the Fed is playing catch up and raising rates aggressively to tamp down inflation causing the yield curve to flatten and ultimately inflect with a negative slope (short rates higher than long rates). I think that's 2-3 yrs away and usually the market sniffs the peak in earnings prior to recession and starts falling 6-9 months before it happens. So I think we have another 18-24 months to go. But given where valuations are, the market will move up in line with earnings growth at best (if no multiple contraction) and more likely a bit less than earnings growth (if multiple contracts s bit which it tend to do as we near the top).
My 2c
Plus the market is choosing to ignore the potential negative impact on trade Trump's protectionist, America first stance could result in, never mind any major foreign policy screw up he may cause with his shoot from the hips style of diplomacy (One China policy debacle in last few months which he finally reversed on Thurs, etc...).
I think market has flat-lined really in last 2 months with much of the gains happening from election to mid-Dec and now market is consolidating those gains as it waits for details on various policies. so still in honeymoon phase with glass half-full mentality. If there are major delays in enacting his tax, dereg, and spending policies and there are a few intl relations blunders, we could easily see a shallow 5%-8% correction, which would be a nice re-entry point for those on the side lines.
I think we are going to have another 18-24 months before a recession-led serious correction of 25%+ because we have to get to a point where economy is heating up, the Fed is playing catch up and raising rates aggressively to tamp down inflation causing the yield curve to flatten and ultimately inflect with a negative slope (short rates higher than long rates). I think that's 2-3 yrs away and usually the market sniffs the peak in earnings prior to recession and starts falling 6-9 months before it happens. So I think we have another 18-24 months to go. But given where valuations are, the market will move up in line with earnings growth at best (if no multiple contraction) and more likely a bit less than earnings growth (if multiple contracts s bit which it tend to do as we near the top).
My 2c