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MARKET OUTLOOK - Global & Local, Perspectives & General Market Feeling
early birds
post Posted: Today, 09:40 AM
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What is the market expecting out of this earnings season?
This US reporting season is perhaps the most significant in over a decade. After the outbreak of the Covid-19 in the US in February, this quarterís results will encompass the heaviest impacts of the economic lockdowns and recession, and takes place at a time where the US economy remains in the midst of a worsening of the health crisis. Market participants are resigned to the fact earnings this quarter will be poor. But the hope remains that the deepest economic and financial impacts of the crisis have passed, with the earnings and macroeconomic outlook to trough and improve from here.

What will be the impact of Covid-19 on company profits?
Itís expected to be a reasonbly dismal reporting period for S&P500 companies. Consensus estimates suggest that earnings growth across the index ought to contract by approximately 44%, as the full impact of the Covid-19 health crisis and economic lockdowns begin to manifest in corporate profits. The biggest hit to earnings is expected to be sustained by cyclical sectors within the S&P500. Earnings growth is tipped to contract by almost -90% across the industrial sector; while the financial sector is tipped to record an earnings contraction of around -50%.


What shape will the recovery take?
The core concern in this reporting season is how the Covid-19 health crisis and subsequent recession has impacted corporate profits. Though the results for Q2 will be significant, especially if companies undershoot expectations on aggregate, the most important detail for market participants within that will be the earnings guidance. Analysts estimate Q2 will be the trough in earnings growth, with the outlook for earnings expected to improve gradually in the coming quarters. Market participants will be scrutinizing company results for what shape the earnings and economic recovery in the US may take, especially given the new risks of ďsecond-peakĒ in Covid-19 infections.

Can the earnings justify the marketís rich valuations?
Secondary to earnings and the earnings outlook itself, a significant theme this US reporting period will be whether company fundamentals justify the high prices and rich valuations across the US stock market. The S&P500ís forward price-to-earnings ration, though somewhat off recent peaks, remains elevated at multi-decade highs. Although this dynamic can be explained away as a chase for yield, supported by central bank largesse, price action, and volatility for the S&P500 this reporting season will be driven by the matter of whether company fundamentals can begin to reflect lofty stock prices.

How could this earnings season impact the financial markets?
The S&P500 has been at the centre of the financial universe in recent months, as market sentiment has improved, and market participants position for a recovery in the global economy. Itís been a binary environment for markets lately, with the S&P500 leading the risk-off/risk-on dynamic thatís underpinned recent price-action. Lately in global markets, and especially the S&P500, has broadly remained rangebound, and seemingly in a pattern of consolidation. Technical indicators point to a market poised to break-out to the upside in the short-to-medium term. But this outcome relies heavily on US corporates delivering an upbeat message about future growth conditions and earnings.

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DYOR as always!!


 
nipper
post Posted: Jul 13 2020, 10:20 AM
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In Reply To: henrietta's post @ Jul 13 2020, 10:14 AM

Individual shares opened up but there was no ASX200 index until about 10;20 and that was @ 6000



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
henrietta
post Posted: Jul 13 2020, 10:14 AM
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Sorry, wrong number !!

Cheers
J



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"Sometimes I sits and thinks, and sometimes I just sits." Satchel Paige

"No road is long with good company." Traditional
 
rlane
post Posted: Jul 12 2020, 09:54 PM
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Hi All
Don't know how accurate this is, but tax revenue is going backwards (well it would)
https://www.usdebtclock.org/index.html

Heres a video from 2012
In 2012 Tax revenue was at 2.3 Trillion now its at 2.5 Trillion while National debt has gone from 15.9 to 26.5T.
https://www.youtube.com/watch?v=eNloZxUCcgk


Thanks
Roger


Said 'Thanks' for this post: early birds  mullokintyre  
 
henrietta
post Posted: Jul 12 2020, 08:54 PM
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I look at Tesla and Afterpay and I'm thinking that there's signs of a crash ........ no idea when, but when prices get ridiculous .....

Cheers
J



--------------------
"Sometimes I sits and thinks, and sometimes I just sits." Satchel Paige

"No road is long with good company." Traditional

Said 'Thanks' for this post: early birds  
 
early birds
post Posted: Jul 12 2020, 08:23 PM
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https://www.sharecafe.com.au/2020/07/10/pri...-not-headlines/


Basis this and parabolic nature of many stocks, the inherent risk has built to be sufficiently high that a significant cash or short position is warranted. Add to this, the number of economically sensitive stocks that are testing support or breaking lower is noticeably increasing as well. Everything from IAG to BSL to Lend Lease to Transurban to Challenger all look troublesome. I know that when I find a lack of value and technically attractive setups, it is a time to be concerned.

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not agreeing all the things he says, but dose think he made some good points

be cautious is right thing to do i guess!!



 

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mullokintyre
post Posted: Jul 9 2020, 11:03 PM
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perhaps the Average American is a little smarter than the elites give them credit for.
According to the Feds latest statement, American Consumers have been paying down debt like there is no tomorrow (maybe for some of them there isn't).
Despite the Fed spending the US citizens future earnings propping up the main players on Wall street, the plebs have been knocking off those credit card debts, and not increasing the debts as they have in the past.

From Zero hedge


QUOTE
One of the striking changes to US consumer behavior spawned by the economic shutdowns from the coronavirus pandemic, was the unprecedented surge in personal savings which exploded to a record 32% of disposable personal income before easing modestly last month to 23.2%.

Now, thanks to the latest consumer credit data released by the Fed, we know what much of that saving went to: paying down debt .
according to the Fed's latest G.19 statement, in May, total consumer credit tumbled by another $18.28 billion, which while less than the record $68.8 billion crash in April, was far below expectations for $15 billion drop. Just like March and especially April, most of the credit repayment took place in revolving credit which shrank by another $24.3 billion in May (after declines of $21.5BN in March and $58.2BN in April) as US consumption literally went into reverse and instead of spending wildly as it does every other month, usually spending what it can't afford, US consumers repaid the most on their credit cards ever.n fact, over the past three months, US consumer have paid down a staggering $104 billion in credit card debt, bring the total outstanding credit card debt below below $1 trillion. Indicatively, the first time total credit card debt hit $1 trillion was back in December 2007, which means that the deleveraging of the past 3 months has sent US credit card balances to a 13 year low!Going back to the aggressive repayment of credit card debt, that is quite an ominous development for a US economy which is 70% reliant on stable - in many cases credit-card funded - consumer spending. Ominous, but not unexpected, because in a time of virtually no visibility on job prospects and how the pandemic is resolved, instead of doing what they do best, i.e. spend, Americans not only saved money but also went into credit paydown mode, crippling an economy where 70% of total output is a direct result of consumer spending; and needless to say, the tens of millions of Americans (depending on whether one believes the initial claims or the BLS jobs report) who have lost their jobs are not going to go out and spend like drunken sailors any time soon.

So how long until this shocking plunge in consumer spending reverses? The answer is that nobody knows, but until US consumers feel comfortable enough to once again "charge it", there can be no recovery.

What we find most surprising, however, is that in this day and age when the Fed has effectively institutionalized moral hazard and where failure is no longer punished as capitalism is now officially dead and zombie existence is rewarded, Americans still care enough about their credit rating to pay down their own debt even as corporations and the country go on a historic debt issuance spree which everyone knows will never be repaid.

Our advice to Americans with credit cards: go crazy, after all if everyone defaults - and gets a default - it's the same as nobody defaulting.


Mick



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sent from my Olivetti Typewriter.
 
early birds
post Posted: Jul 4 2020, 04:38 PM
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https://www.marketwatch.com/story/heres-why...2?mod=home-page

i did think of " long EU market / short US market" as good pair trade not long ago
seems these big fundies think of this trade for medium or longer term. rolleyes.gif

do think of DAX for long trade if one has bullish view!! imho



 
tombeet
post Posted: Jul 3 2020, 01:51 PM
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In Reply To: early birds's post @ Jul 3 2020, 10:05 AM

When a election is linked to the stock market performance you are always going to get a uneven playing field.


cheers

Tom.


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early birds
post Posted: Jul 3 2020, 10:05 AM
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https://www.afr.com/markets/equity-markets/...20200703-p558ly


Recent central bank actions mean capital markets are no longer "free", according to Bridgewater Associates's Ray Dalio, founder of the world's largest hedge fund.

"Today the economy and the markets are driven by the central banks and the coordination with the central government," said Dalio, speaking at the Bloomberg Global Asset Owners Forum on Thursday (Friday AEST).

As a result, "capital markets are not free markets allocating resources in traditional ways".

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kinda take the words out my mouth ..............
capitalism and economic 101 all can throw out of windows

doing less watch more from sideline might be wise...imho



 
 


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