The US stock market is gonna go pop
Discussion
clubsport said:
WayOutWest said:
ooid said:
About two weeks ago Bill Ackman was saying his fund is short in size the 30-year US Treasurys.
I wonder when he will flip to go long the 30 year.Curiously, bond markets historically tend to put in a significant move lower in rates on some kind of catastrophe and flight to quality, rather than buyers just turning up because they look too cheap.
WayOutWest said:
So Bill Ackman has announced in a tweet today he has stopped shorting treasuries, which seems to have impacted yields in itself.
You think so, I don;t know many bond traders who were waiting for him to mention that in his interview on CNBC? 
He has had a good run and points out there is too much risk in the market. As I said in the quote above, empirically corrections appear to come on event forced buying.
We are likely to see some "natural" short term bond support as we come up to month end as fund rebalancing of portfolios could well lead to a bid in the market, a week too early to see that Also refunding announcemmnt due which could well add aome additional supply across the curve?
It's a brave call to suggest the bond rout is over, just yet?
Where we are at current levels, it would take real conviction to start shorting bonds or buying gold outright?
gotoPzero said:
The problem now is when the rates do get cut (JP says thats their next step) we normally see the market dip at the very least.
Not necessarily. It mainly depends if the US goes into a recession or not. If it doesn't, then the S&P could continue upwards, or at the worst sideways. If the US does go into a recession then yes the S&P will more than likely fall. Even some of the best 'experts' are now thinking a recession is less likely. Whatever happens you've gotta hand some credit to JP so far!gotoPzero said:
Anyone been trading the last few weeks?
Yesterday was insane. The problem now is when the rates do get cut (JP says thats their next step) we normally see the market dip at the very least.
CME watch tool says its 50/50 for march.
It's going to depend on why they're actually being cut. Cut because everything is awesome, inflation is over etc or getting cut because zombie corporates are collapsing en masse, commercial property is getting rebased, consumers are in default spirals and banks have said FRO to a huge swathe of the market. Yesterday was insane. The problem now is when the rates do get cut (JP says thats their next step) we normally see the market dip at the very least.
CME watch tool says its 50/50 for march.
It's difficult to know. If they're going to be dumping rates to try and head off such problems then you might get a relief rally but basic logic dictates that as rates decline then money comes out of bonds and into equities.
The market interpreted the news from the FOMC statement (released yesterday at 7pm GMT) with a dovish tone.
Even though they kept the "any additional policy firming" may be required line, suggesting inflation has eased, but remains elevated.
Then the dovish tone from the fed bullish for markets was interpreted from the dot plots and economic forecasts.
Dot plots; Prior to yesterdays statement 2 rate cuts were expected in 2024, now that has been increased to 3 expected cuts in 2024 and 4 for 2025.
The biggest impact was the markdown of inflation forecasts for 2024.....Headline & core (ex food & energy) are now 2,4% where they were 2.6 & 2.5% before.
Jobs/ employment expectation unchanged.
So, we have more rate cuts and lower inflation anticipated, hence the market continuing on a bullish run.
If you have been in money market funds for the last few weeks you may well have missed out on a decent opportunity when you consider the $ value and duration of the short end?
We may continue to trade well from here, but with no rate cuts actually imminent, the market is very susceptible to any stronger economic news printing on the inflation & employment data front, which at some point could lead to a pullback?
(The dot plot will show Fed policymakers' estimates for interest rates at the end of the next several years and over the longer run. The forecasts are represented by dots arranged along a vertical scale — one dot for each of the Federal Open Market Committee members.)
Even though they kept the "any additional policy firming" may be required line, suggesting inflation has eased, but remains elevated.
Then the dovish tone from the fed bullish for markets was interpreted from the dot plots and economic forecasts.
Dot plots; Prior to yesterdays statement 2 rate cuts were expected in 2024, now that has been increased to 3 expected cuts in 2024 and 4 for 2025.
The biggest impact was the markdown of inflation forecasts for 2024.....Headline & core (ex food & energy) are now 2,4% where they were 2.6 & 2.5% before.
Jobs/ employment expectation unchanged.
So, we have more rate cuts and lower inflation anticipated, hence the market continuing on a bullish run.
If you have been in money market funds for the last few weeks you may well have missed out on a decent opportunity when you consider the $ value and duration of the short end?
We may continue to trade well from here, but with no rate cuts actually imminent, the market is very susceptible to any stronger economic news printing on the inflation & employment data front, which at some point could lead to a pullback?
(The dot plot will show Fed policymakers' estimates for interest rates at the end of the next several years and over the longer run. The forecasts are represented by dots arranged along a vertical scale — one dot for each of the Federal Open Market Committee members.)
Phooey said:
Or it might not. But either way an interesting read on the CAPE valuation and forecast from this author https://www.ukdividendstocks.com/blog/sp500-cape-v...
My 2p amateur opinion is it still feels like money is chasing the short-term Fed optimism rather than the medium-to-longer-term earning fundamentals
Thoughts?
Just to come back to the original article, they published this on Feb 9th when the S&P500 was at 4,081, forecasting it could go to 2,710 (a fall of about 33%). It ended the year at 4,769 (up about 17%). My 2p amateur opinion is it still feels like money is chasing the short-term Fed optimism rather than the medium-to-longer-term earning fundamentals
Thoughts?
There’s lot of well made points in this thread that make plausible arguments about why the market was or is over-valued (and which may yet turn out to be true of course), but to me this all just highlights the benefits of holding the index and getting on with your life.
IMO there are ever increasing reasons not to "just hold the index". Leaving aside my natural tendency to avoid following behind all the other sheep it's worth bearing in mind that passive products (Vanguard etc) have been gaining so much traction that by midyear they accounted for half of all assets in US funds and ETFs, up from 47% in 2022 and 44% in 2021. In other words, they've become so big they distort the natural market picture.
Leaving that aside, the Panamax Portfolios are sitting at an all time high (previous high 31/12/21) with even The Great Bond Disaster now showing breakeven in terms total return.
Regrettably all of this apparent good news needs to be seen in the context of inflation which, in real terms, continues to erode everything.
Leaving that aside, the Panamax Portfolios are sitting at an all time high (previous high 31/12/21) with even The Great Bond Disaster now showing breakeven in terms total return.
Regrettably all of this apparent good news needs to be seen in the context of inflation which, in real terms, continues to erode everything.
b
hstewie said:
hstewie said: Certainly gives you an idea where trying to be too smart and overthinking can get you.
I've learnt this the hard way many times over yet still on various occasions have an urge to tinker around the edges. I use mainly passive funds/ETF's however find myself 'thinking' about my investments constantly...am I underweight EM, could add a smallcap fund, bit heavy on US........it's a deep deep rabbit hole. 'Fire and Forget' and the other variations of this concept are great but it's hard to simply forget!VR99 said:
find myself 'thinking' about my investments constantly...am I underweight EM, could add a smallcap fund, bit heavy on US.....
And what's wrong with that? Better to be master of your own destiny than just follow the crowd.The argument for passive investment has been that it meets or beats "average". I don't know about you, but I don't want to be satisfied with average.
It's great fun laughing at highly paid fund managers from a smug "average" position but, seriously, would management keep paying those people unless they thought they were doing something worthwhile? It would be much easier to fire them and pocket the difference.
Panamax said:
The argument for passive investment has been that it meets or beats "average".
What do you mean by average here? Im lead to believe an index tracker performs far better than a typical actively managed fund after fees over the long term Edited by ReallyReallyGood on Saturday 30th December 23:17
ReallyReallyGood said:
What do you mean by average here? Im lead to believe an index tracker performs far better than a typical actively managed fund after fees
I think we need to hear about Panamax returns over the last 1/5/10 years. Easy to throw stones in a year where anyone could have made 15%. Gassing Station | Finance | Top of Page | What's New | My Stuff