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This is the trap awaiting the stock market ahead of a grim summer, warns Nomura strategist

"This is the trap awaiting the stock market ahead of a grim summer, warns Nomura strategist

Sell in pandemic May and go away?

That is a fair question, as a six-month period that has traditionally been unfavorable for stocks gets under way, with painful coronavirus baggage piled on top."

I think they had similar discussions in late Sept 2009/Early 2010, lots Grims/dims and double dip, turned out be scare tatic
Different Reaction this time around? Only time will tell. IMHO, stocks so cheap now and nothing else looks more attractive.
Or we did indeed have an April Fool Rally [We will know @ 4p Central time 8/31/2020 ]


  • edited May 2020
    Every time I start feeling a little more hopeful, I get dosed with a healthy degree of pessimism. Even from David. He built me up in his latest commentary about the benefits of optimism, like Colin Powell would do, only to close with predictions from various experts that the market will retract 60% from here!
  • edited May 2020
    Given the overwhelming psychological component of market "valuation" I really don't believe that it is in any way possible to predict, with expectation of any reasonable accuracy, how a market may be "valued" in the face of unknowns which may have major financial impact.

    There is likely some predictive ability when a market is cruising along a long-lasting slope, either up or down, as it gradually adjusts to the general financial environment, and some technical indicators may be helpful in such an environment.

    In the present environment we have the known unknowns of a major worldwide pandemic with an undetermined end point, an election with the potential to replace a disruptive and dangerously unstable president, a worldwide oil market in freefall, and steadily increasing animosity between the United States and China... actually, increasing animosity between the United States and almost every other major nation.

    Then, of course, there are always the real unknowns: for instance, a vice-president who has just announced that the White House, as the death toll passes 70,000, is looking to wind down the pandemic taskforce.

    It may be arguable to classify the White House as an unknown: it should be generally expected that they will pursue the most self-serving, ignorant or stupid option available in any situation requiring experience, intelligence or leadership.

    The odds of accurate market prediction for the foreseeable future are significantly worse than those of your typical slot machine. Good luck on that.

  • edited May 2020
    Written by Paul Field, Teacher, Educator

    "Everyone is entitled to their own opinion, but you need to know how silly you look if you post some variation of, "Welcome to Socialism..."

    You are not seeing Socialism. What you are seeing is one of the wealthiest, geographically advantaged, productive capitalist societies in the world flounder and fail at its most basic test. Taking care of its people.

    This crisis is not about the virus.

    This crisis is about the massive failure of our, "Booming economy," to survive even modest challenges. It is about the market dissonance of shortages in stores, even as farmers/producers destroy unused crops and products. This crisis is about huge corporations needing an emergency bailout within days of the longest Bull Market in our history ending and despite the ability to borrow with zero percent interest rates.

    This crisis is about corporatized healthcare systems being unable and ill equipped to provide basic healthcare, at the same time they post record profits. It is about crisis response depending on antiquated systems nobody remembers how to operate.

    But most of all, this crisis is a direct result of the politicization of every aspect of our society for the benefit of a privileged few. The vilification of education, science, media, natural rights, rural lifestyles, urban lifestyles, charity, compassion, and virtually everything else for brief political gain has gutted our society.

    What you are seeing is a quarter century of technological brilliance being reduced to a narcissistic popularity contest. You're seeing the folly of basing the health and welfare of an entire society on personal greed. You're seeing all the necessary tools, for us to shrug off this crisis, go unused while people argue over who should get the credit and profit. Even worse, you're seeing vital help withheld because recipients might not, "deserve it..."
    You're seeing a lot of things nobody thought they'd ever see, but you're not seeing Socialism..."

    "Doing nothing for others is the undoing of ourselves."
    -- Horace Mann

    People are hopeful that the market will recover but I don't think it's found the bottom yet.
  • Hi @Mark
    Thank you for sharing.
  • That certainly sums it up. The "quarter of a century" reflects something that my wife and I just discussed at dinner a few minutes ago: the younger people in this country- say, 15 to 35- likely believe that this is the way that their country has always been... they have no clue that most of this has occurred pretty much since 1970 or so.
  • People are hopeful that the market will recover but I don't think it's found the bottom yet.
    I concur. Even Fed chairman Powell stated a W shape recovery is likely. Think there will be rises and falls along the way before viable vaccines are available for the general population.
  • Thanks JohnN. I can’t believe stocks are cheap, what will be the P/E when there is no E? But I seem to have been less than enthusiastic about the equities for years.

    From the link in the OP, Just to reemphasize, Nomura’s managing director, cross-asset macro strategy, Charlie McElligott Says:

    *Summer could bring “hard economic data collapsing like we’ve never seen before, terrible corporate guidance, stories of pending bankruptcies,”
    *second wave of layoffs that will hit the white-collar sector
    *Rising trade-war rhetoric from the White House as a presidential election campaign heats up could present more risk
    *folks are getting ready to hit the wall again, with this idea we’ve moved out of stabilization and now we’re back into the harsh reality of what this is,” without having a Federal Reserve boost and no more stimulus checks until things get a lot worse, he said.
  • What @Mark shared above is spot-on. ..... ..... ... Ummmm..... But..... Where is the political will to CHANGE it all?????????
  • Well, there's a reason that empires die. Things change, and not for the better.
  • Howdy folks,

    Raised a bit of cash yesterday as I'm fading this rally. Slightly reduced intl equity holdings and traded up for quality in the miners.

    Best estimate I've seen has the pandemic lasting for years even if we get a vaccine and life will never be the same.

    Good luck all. Stay safe.

    And so it goes

    Peace and Flatten the Curve

  • @rono and @Charles, hard to be optimistic when the unemployment number continues to climb daily. In this consumer-dominated economy, where is the growth that may lead to recovery or there is another leg down? I am leaning the latter than the former for the rest of the year.
  • Krugman is arguing that this rally is not a bet on a V-shaped recovery, but on the Fed avoiding a financial crisis and interest rates likely near zero for near forever, precisely because the recovery won't be fast. So, relatively few bankruptcies among big companies + TINA makes the rally more or less sensible, though even he thinks it's gone a bit too far.
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