For
five years it’s been the fate of American short sellers to be wrong, as
the biggest rally since the Internet bubble steamrolled defensive
trades.
They’re loading up again, sending bearish wagers in the SPDR exchange-traded fund tracking the Standard & Poor’s 500 Index (VIX) to
almost 11 percent of its shares, the highest proportion since 2012,
according to data compiled by Bloomberg and Markit Securities Ltd. Bets
against atechnology ETF are 67 percent above the 12-month average.
One of
the best things you could do in the stock market over the last three
years has been to buy shares from short sellers, who borrow stock with
the aim of replacing it once the price falls. After bearishness peaked
in 2011 and 2012, theS&P 500 rallied more than 14 percent within six months. With U.S.valuations approaching levels not seen since 2007 and the Federal Reserve scaling back stimulus, the bears are back again.
“That,
from a trader’s standpoint, is a bullish sign, because you don’t have
too much optimism in the market,” Walter “Bucky” Hellwig, who helps
manage $17 billion at BB&T Wealth Management in Birmingham,Alabama, said by phone. “That there isn’t unbridled optimism shows that there could be more upside.”
EPS going down and markets going up.
World Stocks Near All-Time Highs
The Financial Stress Index fell to -1.281, the lowest in its history.
Last time this happened, the financial crisis broke out
Skyrocketing Chinese Late Payments & A Global Meltdown
With a
non-stop flow of propaganda from Western mainstream media outlets, today
Michael Pento sent King World News a fantastic piece which warns that
skyrocketing Chinese late payments may set off a global chain reaction
and subsequent meltdown. Pento also discusses the reason for the
historic low global bond yields.
By Michael Pento of Pento Portfolio Strategies
June 7 (King World News) – Skyrocketing Chinese Late Payments & A Global Meltdown
It
seems that nearly everyone is confounded by the record low bond yields
that are prevalent across the globe today. If investors can correctly
pinpoint the real reason behind these low sovereign debt yields, they
will also be able to find a great parking place for their investment
capital to weather the upcoming storm….
China just did another stimulus.
The People’s Bank of China has just cut the reserve ratio by 50 basis points for “selected banks” according to an announcement.
The
cuts come in the face of a well-known Chinese slowdown. The country is
trying to balance economic growth with a desire to deflate asset
bubbles, hence the “targeted” cuts.
US Job Market Recovers Losses Yet Appears Weaker
Personal Income Tax Revenues Show Significant Softening in Q4 2013, Decline in Q1 2014
For
two consecutive quarters, state income tax revenues have disappointed.
And in the first quarter of 2014, state income tax revenue actually
declined.
The Nelson A. Rockefeller Institute reports Personal Income Tax Revenues Show Significant Softening in the Fourth Quarter of 2013.
State Tax Revenues 2008-2014
McDonalds Has Longest Stretch Without Rising US Sales In History
S&P 500 peaked in 2000 & 2007, when Margin debt did this…
CLICK ON CHART TO ENLARGE
Margin debt reaching all-time
highs can be viewed as a sign of excessive confidence in the markets,
yet knowing this hasn’t been really that helpful when it comes to
portfolio construction.
What has happened in the past
that has been helpful when it comes to margin debt is this…when Margin
Debt was hitting all-time highs and turned lower (which in did back in 2000 & 2007), the S&P 500 was near a peak in prices.
Doug Short updates
us in the chart above, reflecting that Margin debt now for the second
month in a row has decreased from the highest levels in all of history
at (1). Does this mean that “the top” is in for the S&P 500? Not in
my opinion. Does it send a word of caution towards very large portfolio
exposure to the stock market? The Patterns would suggest it does.
Tick, Tick, Tick
Just a matter of time…
h/t @Not_Jim_Cramer
Deutsche Warns Markets Have Left The “Complacency” Phase, Have Entered Full Blown “Mania”
With a
closing P/E ratio over 17 and a VIX under 11, Deutsche Bank’s David
Bianco is sticking with his cautious call for the summer. Their
preferred measure of equity market emotions is the price-to-earnings
ratio divided by the VIX. As of Friday’s close, thissentiment measure has never been higher and is in extreme “Mania” phase. Deutsche’s advice to all the summertime-’chasers’ – “wait for a better entry.”
Via Deutsche Bank,
We find the current PEs demanding.S&P median PE at 18.9, non-financial PE at 18.1 and trailing PE at 17.5 are all elevated vs. history.And the P/E to VIX ratio suggests we have shifted from compacency into mania…
Don’t Chase…
What Is Driving The Market According To Mainstream Media: “Extreme Greed”
CNN Money’s model consists of 7 indicators…
China Land Sales Continue To Plunge In May—Down 38% Y/Y; No Transactions In Some Major Cities
Amid
ongoing central government curbs, China’s property market is cooling
off dramatically despite the onset of the sector’s traditionally “hot
season,” as both land sales and transaction values plunged in May across
300 major Chinese cities.
Total
land sales fell to 1,767 transactions in May in 300 Chinese cities, down
45% from a year ago and 19% lower than in the previous month, according
to a survey published Friday on China’s leading real estate website Soufun.com.
In the
same month, the total transaction value for land sales dropped 38%
year-on-year, marking a 30% drop from April, to 13.75 billion yuan ($2.2
billion).
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