Down goes the Dow

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  • agip
    registered
    3 years ago 12/21/2016 5:55pm CST
    re: Ghost of Igloi
    Forum Index
    Ghost of Igloi wrote:

    Try,

    Let's see how myopic I am versus you. I bet you and most investors didn't know that on 3/31/2015 Wall Street's estimated for 2016 operating earnings was $135.03. The market peaked shortly thereafter at 2,134. On 3/31/2016 Wall Street's estimate for 2016 operating earnings was marked down to $118.12, and has since been revised further to $114.73. The current quarter is tracking at $24.14, so to reach Wall Street's number of $114.73 companies will have to report record quarters of $30.19 each for the remainder of the year. The highest quarter for operating earnings was 9/30/2014 at $29.60.

    Now agip may believe in a turn around in earnings, but there is nothing in the data that says that is the case. The weaker dollar theory will be trumped by any Fed rate move. If you haven't noticed several retailers are struggling and the same can be said of global financial institutions. So it is more that just commodities and energy.

    Hey, but believe what you wish, but the facts are totally different than what you believe to be true.

    Igy


    yes the data do say it was the case. Here is Igy from May 2016, saying there was no earnings turnaround. But there was and there continues to be. Earnigns were rebounding like mad even as we had this exchange.
  • Ghost of Igloi
    registered
    3 years ago 12/21/2016 6:42pm CST
    re: agip
    Forum Index
    agip wrote:

    Ghost of Igloi wrote:

    Try,

    Let's see how myopic I am versus you. I bet you and most investors didn't know that on 3/31/2015 Wall Street's estimated for 2016 operating earnings was $135.03. The market peaked shortly thereafter at 2,134. On 3/31/2016 Wall Street's estimate for 2016 operating earnings was marked down to $118.12, and has since been revised further to $114.73. The current quarter is tracking at $24.14, so to reach Wall Street's number of $114.73 companies will have to report record quarters of $30.19 each for the remainder of the year. The highest quarter for operating earnings was 9/30/2014 at $29.60.

    Now agip may believe in a turn around in earnings, but there is nothing in the data that says that is the case. The weaker dollar theory will be trumped by any Fed rate move. If you haven't noticed several retailers are struggling and the same can be said of global financial institutions. So it is more that just commodities and energy.

    Hey, but believe what you wish, but the facts are totally different than what you believe to be true.

    Igy


    yes the data do say it was the case. Here is Igy from May 2016, saying there was no earnings turnaround. But there was and there continues to be. Earnigns were rebounding like mad even as we had this exchange.


    agip,

    Let's review a couple of facts beyond just the index move up (data from Dow-S&P listed below). Wall Street continued to lower the 2016 non-GAAP operatings earnings as the year progressed, by 9/30/2016 standing at $110.17. Please review your quote of mine criticizing the May 2016 estimate of $114.73. Furthermore, Wall Street has continued to mark down the 2016 number as it currently stands at $108.94.

    https://us.spindices.com/documents/additional-material/sp-500-eps-est.xlsx

    The weaker dollar theory has not played out. The Fed has raised interest rates and the 10 Year Treasury is about 1% higher than my May post. In case you haven't noticed many retailers are struggling and global financial institutions remain under pressure. It will be intersting to see how favorable the Christmas season was for traditional retailers. In regards to financial institutions, add to the latest list the Italian government rescue of the world's oldest bank.

    In case you haven't noticed, the market has more than baked in the optimism you are relying on. The last time non-GAAP EPS was at this level the market was at 1,606 trading at PE of 16.45. Based on the 9/30/2016 close of 2,169 the non-GAAP PE was 22.29. The more appropriate GAAP PE is over 25.

    So, I stand by pretty much everything I said in May.

    Igy
  • agip
    registered
    3 years ago 12/21/2016 7:05pm CST
    re: Ghost of Igloi
    Forum Index
    Ghost of Igloi wrote:

    agip wrote:

    Ghost of Igloi wrote:

    Try,

    Let's see how myopic I am versus you. I bet you and most investors didn't know that on 3/31/2015 Wall Street's estimated for 2016 operating earnings was $135.03. The market peaked shortly thereafter at 2,134. On 3/31/2016 Wall Street's estimate for 2016 operating earnings was marked down to $118.12, and has since been revised further to $114.73. The current quarter is tracking at $24.14, so to reach Wall Street's number of $114.73 companies will have to report record quarters of $30.19 each for the remainder of the year. The highest quarter for operating earnings was 9/30/2014 at $29.60.

    Now agip may believe in a turn around in earnings, but there is nothing in the data that says that is the case. The weaker dollar theory will be trumped by any Fed rate move. If you haven't noticed several retailers are struggling and the same can be said of global financial institutions. So it is more that just commodities and energy.

    Hey, but believe what you wish, but the facts are totally different than what you believe to be true.

    Igy


    yes the data do say it was the case. Here is Igy from May 2016, saying there was no earnings turnaround. But there was and there continues to be. Earnigns were rebounding like mad even as we had this exchange.


    agip,

    Let's review a couple of facts beyond just the index move up (data from Dow-S&P listed below). Wall Street continued to lower the 2016 non-GAAP operatings earnings as the year progressed, by 9/30/2016 standing at $110.17. Please review your quote of mine criticizing the May 2016 estimate of $114.73. Furthermore, Wall Street has continued to mark down the 2016 number as it currently stands at $108.94.

    https://us.spindices.com/documents/additional-material/sp-500-eps-est.xlsx

    The weaker dollar theory has not played out. The Fed has raised interest rates and the 10 Year Treasury is about 1% higher than my May post. In case you haven't noticed many retailers are struggling and global financial institutions remain under pressure. It will be intersting to see how favorable the Christmas season was for traditional retailers. In regards to financial institutions, add to the latest list the Italian government rescue of the world's oldest bank.

    In case you haven't noticed, the market has more than baked in the optimism you are relying on. The last time non-GAAP EPS was at this level the market was at 1,606 trading at PE of 16.45. Based on the 9/30/2016 close of 2,169 the non-GAAP PE was 22.29. The more appropriate GAAP PE is over 25.

    So, I stand by pretty much everything I said in May.

    Igy


    my understanding is that earnings bottomed in 1Q 16 and rebounded in 2Q and 3Q. quarter over quarter. That's all I'm saying.

    page 7, guide to the markets:

    https://am.jpmorgan.com/us/en/asset-management/gim/adv/insights/guide-to-the-markets/viewer
  • Ghost of Igloi
    registered
    3 years ago 12/21/2016 7:31pm CST
    re: agip
    Forum Index
    agip,

    If you review the Dow/S&P data there was no rebound in second quarter. I believe JPM does a good job, the slant is as you can imagine I would say, is overly optimistic. The non-GAAP estimates are slanted to make valuations and the general theme more optimistic. The facts remains that Wall Street has habitually projected non-GAAP estimates of $130 for years only to achieve $114 at cylcle high. It is glaring that the only constant is the willingness of "investors" to pay more for a unit of earnings. I put a quotation around "investors" since the market is driven by institutions that are promoting the same fantasy that "something" justifies the pay-up. In the end cash flows will have to support the market multiple, if not multiple compression will become self-evident.

    Igy
  • Joe Beets
    3 years ago 12/21/2016 8:30pm CST
    re: agip
    Forum Index
    agip,

    Do not expect Igy to admit he was wrong. He has a significant character flaw in that area.

    Joe
  • Ryan Foreman
    registered
    3 years ago 12/21/2016 10:39pm CST
    re: Maserati
    Forum Index
    Maserati,

    You touch on something that continues to bother me about the U.S. stock market. A lot of rationale to buy U.S. stocks is that everything else in the world is not performing well. Therefore, where else are you going to put your money but the U.S. stock market?

    Its a valid reason for why the U.S. market could continue to go up in the near future. But that seems shaky ground to invest in stocks.

    Maserati wrote:

    You're certainly not alone in your view, but a few things...the "mean" in mean reversion depends on how you window the data. It is arguable that it is appropriate to consider only the "modern" (i.e. most current) time period, in which the "mean" has progressively risen.

    It's both funny and disturbing that people seem to consider the US equity markets in isolation. Look at what has happened around the world, and look at the bond bloodbath. If you are "properly diversified", then you might just see a net loss this year on whatever you liquidate/close out, notwithstanding DJIA 20k.

    So the euphoria seemingly hasn't spread beyond the US equity markets. Why not? After all, Gallup just reported that US economic confidence is at an all-time high.

    So maybe the "overall system" is not actually "frail and fundamentally flawed", as you suggest. Maybe a truly diversified portfolio will in 2016 reflect actual economic activity.
  • Ryan Foreman
    registered
    3 years ago 12/22/2016 12:56am CST
    re: agip
    Forum Index
    Productivity growth remains very weak by historical standards. It has been so since 2010.

    But rejoice! Even though lower productivity growth started after the financial crises and the bank bailouts, it looks like media pundits are embracing Greenspan who says entitlement spending (SS, Medicare, food stamps) is to blame. In other words, its all poor people's fault for the lack for productivity.

    On the other hand, there is a movement among the big tech corporations that argues that the productivity metric is out of date and that productivity is in fact greater than what statistics show.

    In any case, its not the fault of the investment community.

    agip wrote:

    existing home sales at new cycle highs

    there is hardly a negative econ number these days.

    things are gathering momentum
  • Say wha?
    3 years ago 12/22/2016 7:07am CST
    re: ryan foreman
    Forum Index
    SS and Medicare are not just for poor people.
  • Marketwatch
    registered
    3 years ago 12/22/2016 7:21am CST
    re: Say wha?
    Forum Index
    U.S. futures on Thursday pointed to a muted open, as analysts suggested the post-election rally is catching its breath as the Christmas weekend approaches.

    Investors are waiting for a raft of economic data due before the open that might jolt the market out of its pre-holiday lull.

    S&P 500 futures edged down by 2.15 points, or 0.1%, to 2,258.25, while Dow Jones Industrial Average futures inched lower by 13 points, or 0.1%, to 19,878. Nasdaq-100 futures shed 7.25 points, or 0.2%, to 4,942.25.

    On Wednesday, the S&P 500 , Dow industrials and Nasdaq Composite all closed between 0.1% and 0.2% lower, as the Dow failed again to climb above 20,000, a mark seen as psychologically important.

    "With the DJIA flirting with the 20,000 level, we are reminded that millennium and century marks on major stock indices have traditionally acted like rusty doors, requiring several attempts before finally swinging open," said Sam Stovall, CFRA's chief investment strategist, in a note.

    "Therefore, it should come as no surprise if stocks take a breather to digest recent gains," he said.

    Economic docket: A third estimate on U.S. third-quarter economic growth is slated to hit at 8:30 a.m. Eastern Time, with economists polled by MarketWatch forecasting expansion of 3.3%.

    At that same time, investors are due to receive a reading on weekly jobless claims, with 258,00 claims expected, as well as a November report on durable-goods orders, with a decline of 4.8% anticipated.

    At 10 a.m. Eastern, a November release on personal income, consumer spending and core inflation is on tap. Economists expect a 0.3% increase in income and spending, along with a 0.1% rise for the inflation figure.
  • History major
    3 years ago 12/22/2016 7:22am CST
    re: Ghost of Igloi
    Forum Index
    Ghost of Igloi wrote:

    Maserati,

    OK, I get that. You summarized in your unique and interesting way (a compliment), what the consensus view is. The non-consensus view, which you alluded to, a frail and fundamentally flawed system. Of course, one can take the cynics view, that the market will be allowed to float up to bail out the "frail and fundamentally flawed system." One only has to look at the private, public pension system, and the Fed balance sheet to see the enormity of it all. I'll take the other side of the trade, where mean reversion in the markets, exposes the phony economy and our inability to adequately plan for the future. In my view we face a regime of rising interest rates and falling stocks, the exact opposite of what we experienced most of this cycle. A truly devilish scenario, where the only place to hide is in the lowest yielding investments. Everything else gets whacked.

    Igy

    The 1950's saw the start of a decade+ bull run that saw the s&p rise 400% during a period of rising interest rates. The two don't have to move in opposite directions.
  • agip
    registered
    3 years ago 12/22/2016 8:12am CST
    re: ryan foreman
    Forum Index
    the falling productivity is fascinating. It may be mismeasured of course, but I've seen some interesting explanations for it.

    -one study found that productivity only goes up when the number of 40-49 year olds is growing. We don't have that now, so productivity is falling, but soon that number will start rising again, so productivity shoudl rise then

    -productivity gains in a service economy are very hard to get. How much faster can a laywer work? a cook cook? Productivity truly rises in a manufacturing economy so we are unlikely to get much more of it

    -aging...the boomers are skewing every statistic incl. this one. People into their 60s and 70s are less productive, but they will die soon enough and that should get the numbers going back up again

    ryan foreman wrote:

    Productivity growth remains very weak by historical standards. It has been so since 2010.

    But rejoice! Even though lower productivity growth started after the financial crises and the bank bailouts, it looks like media pundits are embracing Greenspan who says entitlement spending (SS, Medicare, food stamps) is to blame. In other words, its all poor people's fault for the lack for productivity.

    On the other hand, there is a movement among the big tech corporations that argues that the productivity metric is out of date and that productivity is in fact greater than what statistics show.

    In any case, its not the fault of the investment community.

    agip wrote:

    existing home sales at new cycle highs

    there is hardly a negative econ number these days.

    things are gathering momentum
  • agip
    registered
    3 years ago 12/22/2016 8:15am CST
    re: agip
    Forum Index
    econ today:

    GDP : The third-quarter lived up to its early expectations, rising with each new revision to an inflation-adjusted 3.5 percent annualized rate for the best showing in two years.

    corporate profits:
    Corporate profits rose 4.3 percent year-on-year

    house prices: Home-price appreciation has been moderate this year, trending in the 5 percent range for most readings. The FHFA house price index, however, has been running slightly stronger, in the 6 percent range and near a 2-1/2 year high
  • agip
    registered
    3 years ago 12/22/2016 8:44am CST
    re: Maserati
    Forum Index
    Maserati wrote:

    While I have suggested that coach d's reports are too rosy to be believable, and often seem to be after-the-fact, my best friend is a momentum trader and has done very well over the past 6 months.

    These trading things move in cycles.

    Me otoh, I have been explicit on my "market moves": the bulk out at 16.5k a long while ago now, a relatively tiny 401k to CD's at 16.9 or 17.1k, I can't remember now because it's not particularly relevant.

    RE is getting strange again, lots of sellers are fishing for suckers. Also, I sense a growing movement to unload RE retirement accounts: expensive lakefront properties, expensive "executive" homes, expensive giant McMansions. People are increasingly trying to cash out of high-priced RE, so it's not just the equity markets.

    Of course this is only my personal experience in a few markets.

    And as always, agip provides good laughs. agip I have matured from being driven nuts by you, to laughing at you. It's not that I wish you ill, it's that I understand that there's nothing that I can do that would affect your belief system, which is what seems to be your dominant driving force.

    I wish you the best, but sadly I know you won't get it.

    DJIA cruising around 17,650, still propped up by the Fed. The real economy's screwed, and "inflation" is driven SOLELY by prices and demand that are respectively inflated and created by governmental policy.

    It's fake, phoney-baloney. Of course there is still "an economy", but what it really is, nobody has a clue because of the policy-driven obfuscation of the markets. This is why people now trade on policy rather than on economy.

    hehheh

    all fake - it's all fake

    then the Dow jumped 13%

    yeah, I'll never get it maser, never. I must be a terrible investor.

    but you've been out since 16,500 - you've missed the last 20% rise, plus dividends. but...you...are...laughing at..........me?
  • agip
    registered
    3 years ago 12/22/2016 8:45am CST
    re: agip
    Forum Index
    that was from june 17, 2016
  • agip
    registered
    3 years ago 12/22/2016 8:48am CST
    re: Ghost of Igloi
    Forum Index
    Ghost of Igloi wrote:

    Maserati and coach d,

    The bottom line for me in all of this is another 50% decline in the stock market.

    Igy

    I'm only half trying be a jerk here - I think there is a lesson for us all by reviewing wrong predictions. We should all be more humble.

    That was Igy, on 2/24/16 - since then the dow is up 20.8% plus dividends
  • Echo
    3 years ago 12/22/2016 9:06am CST
    re: agip
    Forum Index
    Econ 101 wrote:

    Of course, like everyone else on here, I'm wrong at least half the time. Good luck.


    Quote of the Day wrote:

    The two rules of forecasting.

    Rule 1: For each forecast, there is an equal and opposite forecast.

    Rule 2: Both of them are wrong.

    -- Bill Berger (again)
  • agip
    registered
    3 years ago 12/22/2016 9:07am CST
    re: agip
    Forum Index
    Jim Rogers - Brexit would be worst bear market in our lifetimes.

    No. it wasn't. (although to be fair, he could have been talking about years down the road as the EU dissolves)

    Article also says he was short US stocks in June 2016. bad move.

    and long china. He broke even on that one

    https://finance.yahoo.com/news/jim-rogers-on-brexit---worse-than-any-bear-market-you-ve-seen-in-your-lifetime-154317566.html
  • agip
    registered
    3 years ago 12/22/2016 9:13am CST
    re: agip
    Forum Index
    back to the pros.

    Harry Dent, in 2015, predicting the market of end 2016:

    “Many of Wall Street’s pundits want to you to believe the worst is over – and that, except for a few bumps in the road here and there, we’re well on the road to recovery. But that’s not what my research indicates. Not even close. The Dow has finally crossed the 17,000 mark and now I see it winding down, week after week… falling to 6,000 by late 2016 or early 2017.â€

    http://www.savvy-team.com/hww/a-retirement-option-for-baby-boomers/
  • Homey
    3 years ago 12/22/2016 9:16am CST
    re: agip
    Forum Index
    don't play dat
  • Ghost of Igloi
    registered
    3 years ago 12/22/2016 9:21am CST
    re: agip
    Forum Index
    agip wrote:

    Ghost of Igloi wrote:

    Maserati and coach d,

    The bottom line for me in all of this is another 50% decline in the stock market.

    Igy

    I'm only half trying be a jerk here - I think there is a lesson for us all by reviewing wrong predictions. We should all be more humble.

    That was Igy, on 2/24/16 - since then the dow is up 20.8% plus dividends


    agip,

    No offense intended or taken here. In this business, I believe that one should have an opinion of their own and that opinion should be based on facts. Having an opinion on the market should not be viewed as expressing hubris. In fact those that express skepticism like in the run-up to Black Tuesday in 1929 become "Doom Mongers."

    A month after my post of 2/24/2016, Wall Street expected 2016 non-GAAP EPS to reach $118.12. Currently the Wall Street estimate has been marked down to $108.94. At that same time, the 2017 estimate was set at $135.95, and now stands at $131.11. Let me remind you that Last Twelve Month (LTM) non-GAAP S&P EPS has never exceeded $114.51--never---ever. So any belief that the investment environment has improved since that post is based more on hope than reality.

    So what do we really have in this wonderful market everyone is cheering for? It is an environment where "investors" (and I use this term loosely, and should more appropriately called institutional investors) are willing to pay up for a unit of earning. From cycle peak earnings (9/30/2014) a non-GAAP PE of 17.22 to (9/30/2016) 22.29, an increase of 29.44%. When using the more appropriate GAAP numbers, we see a move from 18.61 to 25.39 or 36.43%.

    There is nothing new her, just "investors" making the same mistakes as in the past. My view remains, and has been stated before, the run-up in the market only makes the reversion to mean even worse. The current market set-up represents one of the worst investment environments in history. There is nothing other than a revisionist view, which is not based on market history, to state otherwise.

    Igy