Saturday, 28 May 2016

Stocks rise as US market looks "more expensive than ever"

Stocks rose on Friday.

The S&P 500 rose 0.4 percent, the STOXX Europe 600 rose 0.2 percent and the Nikkei 225 rose 0.4 percent.

Bank of America Merrill Lynch’s chief investment strategist Michael Hartnett wrote in a note on Friday that redemptions from equity and high-yield funds over the past four weeks have pushed markets close to a “contrarian ‘buy’ signal” and threatening “bear capitulation” upside for risk markets.

On the other hand, it is hard to see how much upside there can be for markets when US stocks are already more expensive than ever based on price-to-sales ratios.

Friday, 27 May 2016

Markets mixed

Stocks were little-changed on Thursday.

The Shanghai Composite Index rose 0.3 percent but the Nikkei 225 and the STOXX Europe 600 edged up just 0.1 percent while the S&P 500 was flat.

US crude oil slipped 0.2 percent while the US 10-year Treasury yield fell to 1.823 percent from 1.87 percent on Wednesday.

Strategist Jim Paulsen thinks that the S&P 500 should soon hit a record high but the view among other analysts remain mixed.

Thursday, 26 May 2016

Stocks rise as Greek debt deal reached but Japanese debt may need central bank bailout

Stocks were mostly higher on Wednesday.

The S&P 500 rose 0.7 percent, boosted by gains in energy stocks after US crude oil 1.9ercent.

The STOXX Europe 600 jumped 1.3 percent after the euro zone and the International Monetary Fund reached a compromise deal on Greek debt relief.

In Asia, the Nikkei 225 jumped 1.6 percent even though the Japanese government has the world's heaviest debt burden.

Bill Gross thinks that the Japanese cental bank will eventually need to buy that debt and forgo repayment to help the government cut its debt burden.

Or maybe Japanese workers will work until they reach the grave to help the government pay off its debt.

Wednesday, 25 May 2016

US and European stocks jump

Stocks in the US and Europe rose sharply on Tuesday.

The S&P 500 jumped 1.4 percent and the STOXX Europe 600 surged 2.2 percent.

“Some of the economic news that’s come out has been fairly nice,” said Tom Carter, managing director at brokerage JonesTrading. “There‘s the underpinnings of something to build on.”

However, in Asia, the Nikkei 225 fell 0.9 percent while the Shanghai Composite Index fell 0.8 percent.

Tuesday, 24 May 2016

Stocks mostly fall but rise in China despite need for "massive bailout"

Stocks mostly fell on Monday.

The S&P 500 fell 0.2 percent, the STOXX Europe 600 fell 0.4 percent and the Nikkei 225 fell 0.5 percent.

However, the Shanghai Composite Index rose 0.6 percent even as banking analyst Charlene Chu of Autonomous Research warned about China's debt problem.

Chu said that "China is nowhere close to deleveraging" as it is "still adding 10 to 20 percentage points to the ratio of credit to GDP every year".

Chu also said that despite government rhetoric, action to manage the debt problem has been limited because "the idea that China needs a massive bailout in the trillions of U.S. dollars isn’t something I think the authorities are on board with or accept yet".

Monday, 23 May 2016

Fed rate hikes "not the stuff that would push stocks into a bear market"

The Federal Reserve may be ready to raise interest rates soon but some investors appear sanguine about prospects for stocks, according to a recent Wall Street Journal article.

“There is a lot of money globally chasing very few high-quality assets,” said Mark MacQueen, co-founder and portfolio manager at Sage Advisory Services Ltd.

Ben Mandel, global strategist at JP Morgan Asset Management, thinks that while first-quarter earnings for US companies were poor, “that may have been a nadir", and that US stocks could offer mid-single-digit annual returns by the end of this year.

David Donabedian, chief investment officer of Atlantic Trust Private Wealth Management, said: “No matter whether the Fed raises rates in June, July or later, the key point is that the Fed is in for a very slow pace of normalizing its interest-rate policy, which is not the stuff that would push stocks into a bear market."