Capital Markets

Things Just Got Even Weirder

Just when you thought the 8 year bull market for US stocks had shown us everything, something new comes along. 

Mega-Bears Smell Blood As Mall REITs Tumble

"There has been a steady drumbeat of negative reports from anchor retailers in the mall. As a result, when we keep hearing bad news it adds to the impression that there is a problem in the malls.”

Stocks Mixed As Treasuries Suffer Longest Losing Streak Since 2012, Dollar Pops Ahead Of ADP

Asian markets dropped following disappointing China trade and Japan GDP data, while European stocks rebounded for the first time in five sessions led by miners and banks. US futures were little changed with a strong dollar pressuring oil below $53; sterling slid for the eighth day out of nine before the chancellor of the exchequer delivers his spring budget. Treasuries are headed for their longest losing streak since 2012 ahead of a 10Y U.S. debt auction, and today's ADP private payrolls report.

"Last Time US Stocks Were So Expensive, This Happened"

The best argument for avoiding US stocks is simple: valuation.  Using the Shiller PE Ratio (price divided by a 10 year lookback at earnings), domestic equities trade for 29.9x earnings versus a long run average of 16.7x.  The last time they were this expensive was early 2002, or 15 years ago.

JPMorgan Explains What Causes The Market's 3:30pm Ramp

"... end of day rebalancing means that equity trading becomes even more concentrated at the end of the day as passive funds grow. Passive funds typically rebalance at the end of the day because transacting at the closing price better aligns the performance of passive funds to the performance of the index they track."

Frontrunning: February 24

  • Futures drop along with oil prices (Reuters)
  • The U.S. Is the World’s Third-Best Equity Market Since 1900 (BBG)
  • U.S. Talks With Mexico Clouded by Mixed Message (WSJ)
  • A Tea Party for the left? Liberals hope so (Reuters)
  • Kushner, Ivanka Trump Block Attack on Paris Pact (WSJ)
  • Saudi Arabia’s Oil Wealth Is About to Get a Reality Check (BBG)

ValueAct's Jeff Ubben Is Selling On "Overextended Valuations", Builds $3 Billion Cash Pile

Speaking at a Reuters activist conference, ValueAct's Jeffrey Ubben, said that his firm had been taking money out of the capital markets as valuations have become overextended, leaving it with $3 billion in cash.   "I really feel that the large-cap activist plays are very treacherous with high PEs (price-to-earnings) and not a lot of growth."