According To SocGen The Problem Is Not "China", It's This
Earlier today, when Bank of America said that "panic is building" in the market and asked, rhetorically, "how bad could it get", it listed what it thought are the five core pillars in the bailed out bank's wall of worry:
- slowing US and global economic growth (US 4Q GDP tracking 1%)
- collapsing commodity prices (oil prices averaged -42% y/y in 4Q)
- renewed fears about China (Shanghai Composite -38% since last June)
- heightened geopolitical tensions (Middle East, North Korea, etc.)
- the first transition to Fed policy tightening (in a decade).
We were very surprised that one thing missing, perhaps the most important thing, was fundamentals. And, as SocGen's Andrew Lapthorne conveniently points out, as he has been pounding the table on this issue for years, it is fundamentals - stretched to ridiculous levels - that are finally being appreciated by the market, and the result is the dramatic repricing we have seen.
As Lapthorne says, whilst the focus has been on China, where the CSI 300 fell 10% last week and at time of writing is off another 5%, "China and its accompanying devaluation is just another domino to fall, in what has been a long process of investor realisation that all is not well in the global economy. For us the real problem remains the lack of growth, a problem QE sought to disguise, but did not solve through higher asset prices."
So having deferred growth for years and years, hoping central bankers would magically conjure it out of thin air eventually, suddenly the market is realizing it the most important component to justify valuations isn't coming, "and now after four long years without any profits growth, the risk is that MSCI World mean-reverts to its original 2011 PE multiple, which would imply a further 50% decline from here. Even decline back to average would imply a 15% drop."
So what does this valuation disconnect mean? Lapthorne explains:
This gap between equity prices rises and actual profits means that despite recent price declines, obvious pockets of value are still quite rare. Median valuations remain elevated, especially once huge debt piles are included and EV/EBITDA metrics are used and valuation dispersion (the choice of valuations available in the market) is still below average in Europe and the US. However from what was a very low base, the number of deep-value names (a la Ben Graham) has risen from 43 at the end of November to 73 as of close Friday, with the bulk of these new names coming from Asia ex Japan, Japan and the US. Quality Income names with a 4% yield however remain rare.
So could the long, long overdue great rotation from growth and momentum names to value finally be starting? If so, some of the upcoming flame outs, not just among the FANGs but across the entire market leadership, if such a thing exists, in the coming months will be stuff financial horror stories are made of.
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And this
http://1.bp.blogspot.com/-XAr8liUQ5zA/Vo7SdWnjkPI/AAAAAAAAAcc/jrpmgyCnw-...
Stop this negativity! The DOW is almost green!
And here I thought the 3:30 ramp was dead.
Graphical representation of "kick the can" until the can is full of slag
The Minnesota Vikings wish they had someone who could kick that well.
~""China and its accompanying devaluation is just another domino to fall, in what has been a long process of investor realisation that all is not well in the global economy."~
The "long process" is nothing more than the realisation that there is nowhere to run in the short term and no place to hide in the long. That coupled with the failure to understand that "not losing money" by sitting on the sidelines is sometimes just as valuable as risk in anything else. Hard lesson to teach, that one is, (pardon my Yoda).
Go Packers!
up over 100 just a moment ago.
Today's is impressive.
Not dead, but it had to be bailed out of jail after running down the street naked singing love ballads to Yellen......
Wait, am I reading that right?
In 2010, 90% of Emergency Room and Urgent Care were covered, but now only $150 of Emergency Room and $50 of Urgent Care are covered?
How is that not criminal theft of premium?
"criminal theft?" (Laugh Track Deafening!!!)
Legal theft happens daily in the Stawk Market...courts...banks...corporations...Wall street...K Street....even Las vegas, Nevada casinos.
I am not certain where you find the humor in theft...unless it is you who are laughing all of the way to the bank with the ill gotten gains.
Thanks to .GOV, words have new meanings.
Budget 'cuts' are not real cuts, only reductions in increases.
Dept of Defense goes everywhere around the world bonbing people but our southern border is unprotected.
Marriage no longer means marriage.
Affordable no longer means affordable, as in "Affordable" Care Act
Even the meaning of "is" is questioned.
Oh, and to your question: 'criminal' is now 'business as usual', because the latter is less judgemental.
Newspeak.
Not to worry. PPT just woke up and BTFD
I just step out of the way and let them do their thing. Damn decent of them to be so punctual and predictable.
How long have we been talking about the irrelevance of "Funnymentals"
in a Central Banking Cabal's macro-economic control freak environment?
Here is one "Funnymental" that matters:
The Global economy is in a serious decline despite the control freak's circus clowns.
looks like we broke the trend channel to the upside. hoping for a short rally now.
I studied finance at university for 4 years the ability to print to infinity has made all that study meaningless QE4 will be along after this experiment of pulling the teat fails
Gartman is net short - only direction market can go is up!
We enter it at last. The Dark Time.
The face of the Destroyer has been turned to us.
I get these little flashes of insights sometimes. Moments of clarity. Visions of the future. Like being lost on some forgotten highway and suddenly realizing where you are. A glimpse of the pattern that binds everything together, the face of reality itself. A shadow of understanding that shows you how everything that was creates everything that will be.
I have looked into the future. I have seen only darkness. The darkness that hides behind the hills, hides in the hearts of men, hides for years and centuries, waiting to slither out and reclaim its crown. We have lived in the light for so long, that we have forgotten the darkness is eternal, and will be the last thing, just as it was first.
I have seen just how high the odds are stacked against me. Out there in the world are legions of frightened sheep. When the dark returns, it will remake the laws of nature, and the sheep will grow fangs and turn against whatever is closest to them. They will feast upon each other, devouring mindlessly everything in their path. Men will try to lead them back to the light, but nothing can hold back the avalanche.
I would stop it. I would hold the darkness at bay, but I am only a very small man in a very large world. There is only one thing to do: keep the light burning in my house until it either drives the darkness away, or is consumed by it. I am doomed to die, but I always was. If this is to be my end, I will hold on for as long as there is breath in my body.
I will lift my lamp high and dare the darkness to claim me.
I am not alone.
Chinese would be envious of that last hours near vertical climb
And, takes 10 times as much money to do here as there. And Bloomberg won't say a word. They will say it was "individual investors ..."
It looks like Mr. Yellen fired up the Citadel trading desk.. The panic buying has gone full retard.
I'm not sure if I have seen such a wide variety of stocks ramp up at exactly the same moment without someone at the FED saying something first. Were are talking about vastly different companies and industries here and the charts look exactly the same.
I'm pretty sure the PPT went full retard ... and I used to think they didn't mess with the markets all that much and it was paranoia to think so ... I guess I was wrong.
Yet they recently have had a bad habit of ramping at the wrong levels/time periods. This ends up destroying their effort later in the week and adding selling pressure due to the visible fail.
It is almost as if an amateur team has taken over in the past 6-8 months or so.
The VIX also got Donkey Konged...
JPM did say sell everything ... ya think they planned to do that?
Lost for Words
I was spending my time in the doldrums
I was caught in a cauldron of hate
I felt persecuted and paralysed
I thought that everything else would just wait
While you are wasting your time on your enemies
Engulfed in a fever of spite
Beyond your tunnel vision reality fades
Like shadows into the night
To martyr yourself to caution
Is not going to help at all
'Cause there'll be no safety in numbers
When the right one walks out of the door
Can you see your days blighted by darkness?
Is it true you beat your fists on the floor?
Stuck in a world of isolation
While the ivy grows over the door
So I open my door to my enemies
And I ask could we wipe the slate clean
But they tell me to please go fuck myself
You know you just can't win.
Pink Floyd - Division Bell
Someone sure decided it wasn't gonna be red today.
Unless, just a chance that someone starts whispering QE again and the fantasy of fundamentals evaporates like a soap bubble in a thicket.
Sorry to interrupt this informative thread but how do I stop these irritating ads with sounds that pop up and disrupt my feeble, decrepit brain from functioning? I can't even find the X button to manually stop each as it blasts off.
TIA
Install AdBlock Plus. This site is essentially unusable without an ad blocker.
Or just use a proxy, like proxysite.com
It might even has some additional benefits.
Problem with SocGen is that The Bank was almost bankrupt during the 08-09 crisis (thanks to the support from FedUS via AIG bailout and French Gov for the rescue and ... QE 1-2-3). Seems they are not always good at assuming their exposures. So I would not put to much money with their lagging ideas. Are they talking their book?
Basically the Bank has some difficulty to make money in this low yield environment (not the only one). Second the bank is very reluctant to lend money with such "high valuation" environment. Third , trading is difficult is such range trading environment except for Volatilty Trader ( that used to be a SocGen spceciality).
So goog environment for Soc Gen ? Could it be hight volatile market, higher rates and lower equity valuation??
Will be nice to see the outcome !!!
according to Soc Gen :
hahaha!
The thieves leave the Titanic...its getting hot in the kitchen.
Its time the libertarians started discarding their fase noses.
After all, its "all for one and one for all", on the Titanic...if we all play the "skull n bones" game. Oligarchy united.
'Cos there aren't enuff life boats for all the Oligarchs.
Come on the Koch Bros. Hillary says the Oligarchs need to pay a 4% surcharge over $ 5 million wealth ...
Begads, herd thinning amongst the rich!
She must be feeling desperate...
Attention everyone
it's time to PANIC!! Run for your lives!
According to Lockhart there's no problem at all - JOKE OF THE DAY https://youtu.be/kHnRIAVXTMQ
Fed's Lockhart Says Global Markets Drop Won't Hurt U.S. Outlook http://www.bloomberg.com/news/articles/2016-01-11/fed-s-lockhart-says-gl...
Oh please. BTFD.
enuf with all this "world economy..profits..median valuations...EV/EBITDA metrics...dispersion nonsense
there is only ONE ECONOMY and it is the QE economy.