The last few years of the Everything Bubble were driven by the ultimate dumb money: corporations borrowing to buy back their stock at record high prices. A whole generation of CEOs and CFOs were able to pad both their reputations and their year-end bonuses this way while, it seemed, blatantly screwing over their employees and […]
The World’s Biggest Hedge Fund Is Getting Whacked, And Why “Moneyness” Matters
A few years ago the Swiss National Bank (SNB) – which traditionally held “monetary assets” like government bonds, cash and gold to back up the Swiss franc — decided to branch out into common stocks. This was a departure, but for a while a brilliant one. The SNB loaded up on Big Tech like Apple, […]
Has This Become A “Short Everything In Sight” Market?
One of the strangest things about this strangest-ever expansion has been the way pretty much everything went up. Stocks, bonds, real estate, art, oil – some of which have historically negative correlations with others — all rose more-or-less in lock-step. And within asset classes, the big names behaved the same way, rising regardless of their […]
Corporate Share Buybacks Looking Dumber By The Day
A recent MarketWatch article notes that: GE was one of Wall Street’s major share buyback operators between 2015 and 2017; it repurchased $40 billion of shares at prices between $20 and $32. The share price is now $8.60, so the company has liquidated between $23 billion and $29 billion of its shareholders’ money on this […]
Michael Pento: Falling Corporate Earnings Will Fuel The Next Leg Of The Bear Market
If corporate earnings rise in 2019 like Wall Street analysts expect, stocks are a screaming buy at these bear-market levels. But earnings won’t rise and stocks are not a buy, says money manager Michael Pento: Earnings Recession of 2019 President Trump’s plan to stimulate the economy, known as The Tax Cut and Jobs Act, was […]
GE, Nvidia, Nordstrom, Bitcoin All Tank, And The Fed Notices
The sense that something isn’t right out there just got a lot stronger. And the Fed, in response, is now tiptoeing back towards QE. Let’s start with the sudden bad news: Chipmaker Nvidia plunges after missing on revenue and guidance (CNBC) – Nvidia stock fell as much as 19 percent Thursday after the company reported […]
A Palpable Sense Of Panic
Based the last few days’ headlines you’d never know the world is in year 10 of a pretty good expansion. Check this out: Not terrified of a recession? These stocks hint you should be Cyclical commodities continue to weaken, gold moves in relation Italian banks on verge of new crisis on €400 million hole at […]
The World’s Smartest Investors Can’t Figure Out The Markets – And That’s A Really Bad Thing
Hedge fund managers sit at the top of the financial world’s food chain. They’re generally seen as the smartest money managers, and their companies have the most flexibility to pursue new opportunities. The result is supposed to be the best possible returns – for clients who can afford the high fees. But lately things haven’t […]
Rising Wages = Shrinking Corporate Profit Margins … And Falling Stock Prices?
Today’s Wall Street Journal contains a couple of charts that illustrate a relationship that’s not getting much media attention these days: The fact that tightening labor markets are forcing companies to raise wages, in the process squeezing their own profit margins. Historically this margin compression has been either a cause of or contributor to cyclical […]
Late-Cycle Sadness: Value Investors Give Up And Buy Netflix, Apple
Back in the late 1990s I interviewed for an analyst job with a value-oriented money manager. My main impression of our talk was how sad the guy was. The tech bubble was in full swing, any little nothing company with even a tangential relationship to the Internet was soaring, and this poor guy’s cash-rich, super-safe […]
When Investor Psychology Turns Dark, All News Is Bad News
Big companies report blow-out earnings. Home prices soar. North Korea promises to end its nuke program, possibly averting another Asian war. And stocks fall. Does this mean the news no longer matters? That’s exactly what it means. But it never did matter. In a world this complex, big things both good and bad are always […]
So What Blows Up Next? Investor Psychology Shifts To The Dark Side
Facebook is an epic growth story. It now has an astounding 2 billion active users and a stock that – from an already richly-valued level – rose by 53% in the previous year. In February its market cap peaked at $560 billion, a number that exceeds the GDP of many countries. Over 90 percent of […]
“Tech Wreck,” “Techlash,” “Techmageddon” – Whatever You Call It, Wall Street Is Terrified Of It
Back in the 1990s, critics of the dot-com bubble used to point out that the global economy depended on the US stock market and the US stock market depended on, like, ten Internet stocks with negative aggregate earnings. The resulting inverted financial pyramid was, the critics claimed, very easy to tip over. They were right […]
A Bull Market For The History Books — Bear Market To Follow Shortly
If you’re getting the sense that stocks always go up, that’s because they’ve been doing so for a really, really long time. From CNBC today: On the bull market’s ninth birthday, here’s how it stacks up against history • The Dow has quadrupled during the bull market, which turned 9 on Friday. • This is […]
Remember When Stocks Only Went Up?
Long ago in a distant galaxy called “2017,” stock prices rose every day. And the people were happy. With paper profits in hand they maxed out their credit cards and bank lines to buy flat-screen TVs and cars and cover their student loans. Then one day a darkness began to spread. Stocks began to move […]
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