That sure is the consensus. We hear it all the time from the talking heads that no way is this going to be a 2008ish market. Other than of course from the usual suspects in perma bearland who think another 2008 and 1973/74 is always around the corner. Anyone here think we could be in for another 2008? I don't because my bias and conditioning is that events like 2008 and 73/74 are generational occurrences. But who knows.
Idle thoughts - GILD and CELG are getting a nice bid today amid another woeful day for biotech due to a nice write up in Barron's. Will they be the leaders on the next rally? JNJ hanging tight too. I wish there was more fear in the markets instead of the don't worry be happy I am seeing. Whoever thought the 10 year Treasury would be below 1.80% this year? As for the another 2008, Black Swans can't be seen ahead of time (or can they) So not sure if we do have another 2008 it would be because of the effects of oil ala defaults in high yield/banks etc. Would it be from the fear of who is elected President later this year? From a contrarian point of view (where we don't get close to another 2008) maybe what we need are more mainstream analysts and investors coming over to the opinion that yes, another 2008 is upon us. Or maybe just more fear ala the VIX over 40 for a few days.
Sorry for the philosophical ramblings about nothing.
China and commodities seems to be strong headwinds, and we're probably overdue for a bear market of some sort, but I still think there would need to be a domestic credit market problem to cause us to go that extreme.
In 08 it was the subprime market. It doesn't sound like that's an issue currently. It could be junk/energy, but it sounds like many of the companies are still profitable enough with oil in the $30's to not cause a blow up.
But I think there are going to be a lot of companies in the oil patch who won't make it, and the question will then be with their banks. The revised capitalization requirements will turn out to be a plus.
As I write this, there's a hold on Chesapeake....for a reason not yet disclosed.
1. The commodities price collapse will cause whole nations to become insolvent along with half of the energy industry;
3. Central banks unable to stop it with interest rates already near zero;
4. Currency devaluation in China and elsewhere causes trade to slow;
How much more does it have to fall to mean something?
You say countries will default because of it. Which countries? Nigeria? Venezuela? Russia?
Commodity producing countries aren't running deficits with debtors financing it like Greece was to default on that would pose systemic risks through the financial system. Saudis aren't going to collapse any time even if they won't be able to spend as much. Countries that are printing money without oil revenues instead will face inflation but won't put debtors in jeopardy.
Any black swan event would have some spreading systemic risk. Not that they don't necessarily exist. But without evidence for or against, I find it hard to take such a definitive stance that it is going to be really bad or it is going to be all OK. There is a third alternative that we just don't know and won't know until it happens or doesn't.
The original was from the USA to Europe. What outside country will be providing the $?
Bottom line: We have a long way to go to the downside before the true nature of this deja vu financial crisis is fully understood and market valuations adjust appropriately. The only sane financial commentator that fully understands this is Joe LaVorgna, the Managing Director and Chief U.S. Economist for Deutsche Bank Securities.
My way of thinking is what I have posted in the past we are in a sea change that people are not talking about - free trade, population growth, robotics, AI, free movement of money and movement of mfg to lower cost areas causing deflation and hardship for worker.
So, I'm expecting a slow grind - years.
The EU can show us what to expect a VAT to deal with the debt (for awhile) and social programs, a smaller fragile middle class etc.
Regardless kudos to you and remain flexible and open to changing conditions to your scenario. Price always leads us out of the bear as the bearish data is at its peak months and months after the bottom. For instance, junk bonds bottomed in December 2008 and that was many months before the actual default rate topped.
Edit: Before you respond I can almost read your answer. i.e this last bull was not typical and ran for a lot longer than 44 months and hence this bear will also last longer and run further than 14 months. I am sure many wouldn't disagree with you on that.
I am looking at it from a macro point of view. That will overshadow the stock environment. Profits will be harder to grow in most areas. Fewer individuals will have $ to put into stocks.
This is not a depression, not stagflation, just stagnation.
When the Marshall Plan was implemented, the world was a wreck. Only the USA had the resources to get it done. Syria needs to be rebuilt from the ground-up. But apart from that, even though Europe is not literally in ruins, everything ELSE, in economic terms, IS in ruins. The USA has squandered a great deal of what made it a super-power. Have we still got what it takes, though?
"This last bull was not typical and ran for a lot longer than 44 months and hence this bear will last longer and run further than 14 months."
And there's the rub.
Here is a link to a 10-year chart of the S&P 500:
Glancing at this chart two things are obvious:
1. The long-term bull market trend line starting from March 2009 to late 2015 has been decisively broken to the downside. Once broken, it does not easily regain its footing and cross back above it quickly.
2. We have a LONG way to go to the downside.
From trough of 666 on March 9, 2009 to peak of 2134 on May 20, 2015, this represents
a 220% gain in the S&P 500 index over a six-year period. A bear market correction will not end at 1820, 1810, 1780, etc., levels that the talking heads are fixated on. These levels are potentials to play a short sharp oversold bounce in a continuing downtrend. Frankly, I am not smart enough, nimble enough or unemotional enough to play these.
Simple Fibonnacci retracement levels (38% and 50% ) of the total 6-year bull market gain from the high of S&P 2130 are 1575 and 1400 respectively. That is where I think we are heading sometime between now and March/April 2017 and THAT is the fat pitch I am waiting to swing at.
Can't even remember what brilliant thought I wanted to share this morning.
NO. I don't think it's a repeat of '08. But if "Bill" shows up again (or someone like him) I might change my mind.
I haven't looked. I'm still in HY munis at 100%.
When I do move out of them it will be
High Yield Corp. Bonds
Technology - dividend paying
Emerging Markets Bonds
US Small Caps DIV
Off topic: I'll probably be voted off the island for writing this, but I think Sanders is a refreshing breath of fresh air to the national political debate. And, I'm a registered Republican that campaigned for Reagan at the Infinite Corridor in 1980 ... although a bit embarrassed to admit that given those in office and running recently ... Sarah Palin, Donald Trump, Ted Cruz, etc. Fear the party as I/we once knew it is on verge of collapse.
World recession/depression upon us - similar to the 30s.
China's growth last decade was mostly illusion.
Banking system will collapse owing to oil related securities.
Massive run on mutual funds and ETFs about to happen.
$20 oil here to stay.
Central banks will break down completely.
Isn't it curious every time the stock market takes a few lumps these networks roll out the bears?
This thread will be a good one to revisit in 6 months.
1. Bernie Sanders - Nice guy, has a good heart. Beat up Wall Street isn't going to grow economy. Will be too distracted with too many things to carry out his agenda against Wall Street and pro consumer things (not that these are necessarily bad things), to do the highest priority things needed. Has no clue of the future technology and how to accommodate/leverage it.
2. Hilary Clinton - Able to do what is needed to win but will be long on rhetoric short on action if elected. Too much politicking, not enough eye on the ball.
3. Donald Trump - Shrewd businessman but every deal he has made has only benefited himself and has crumbled soon after for others. Is the political equivalent of the financial engineering CEO. Not a team player. Ego can't share the stage with anybody so his team including the VP will be some airhead yes-men/women with him micromanaging. Most likely to send US into cultural or economic bankruptcy after window-dressing deals.
4. Ted Cruz - Is going to look like fish out of water when he realizes he has to deliver and can't just blame somebody or tear down things to get support. Will likely find polarizing things to rant against and distract people from his own inability to deliver. Immigrants, almost every other foreign country will be fair game.
Ugh. How did we get here on the greatest country on earth?