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why market still so high when so many bad news?

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Old 10-08-2019, 10:28 AM   #1
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why market still so high when so many bad news?

even pm lee also admit poor economic ahead w trump n xi trade war, china also admit poor economic w their trade issue....

why?
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Old 10-08-2019, 10:37 AM   #2
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It's like you having fever, but the doctor tells you that you are fine and won't feel symptoms as long as you take Panadol. You continue to go to work. Your colleagues and bosses can tell that you are not fine seeing you lose weight by the day. But both of you are assured by the medically qualified doctor that he can increase the dosage of Panadol to counter your symptoms. So you go about your working life as per usual without letting yourself the time to heal. Sooner or later, your body cannot cope even with all the Panadol in your body, to the extent the Panadol got no more effect in your body. The doctor has wrecked your body beyond repair. Your colleagues and bosses fire you from your work because they loss confidence in your capacity to carry on working.

Fever=debt
Doctor=central bank
Panadol=QE and low/zero/negative interest rates
Bosses, colleagues=financial institutions and investors
Yourself=stock market

Simple storyline to simplify the situation.

Sent from HMD Global TA-1004 using GAGT
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Old 10-08-2019, 11:02 AM   #3
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I guessing the invisible hand behind want it to drop from a higher point so they can amass an even greater amount of wealth.
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Old 10-08-2019, 11:24 AM   #4
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There’s always “bad news.” Trade skirmishes, for example, aren’t new. The U.S. and Japan had their fierce trade disputes over time, especially in the 1980s. Bad and incompetent U.S. presidents aren’t new either.

I recently took a look at past U.S. recessions — note, the U.S. isn’t in a recession and doesn’t seem particularly inclined to enter one in the near term, but this is merely an example — and how the U.S. S&P 500 performed during those recessions. It looks like the stock market was just as likely to rise as to fall during those recessions. Basically, flip a coin, because the market will probably move sideways, on average, even when the national macroeconomy is contracting.

My biggest concern is climate change, although even that crisis may or may not negatively impact corporate profits and associated stock valuations. There are plenty of companies already profiting from helping to save the planet, and there are more to come. The fossil fuel business (for example) must perish, but that’s just one sector.

There’s also a lot of good news, for example the hundreds of millions of our fellow planetary inhabitants who are no longer living in extreme poverty. In terms of aggregate measures today’s world is, on average, better for humans than it ever has been. We just need to keep working to stay on course toward an even better future, including getting greenhouse gas emissions under control.
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Old 10-08-2019, 11:29 AM   #5
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Euphoria now, so crash is a matter of time (it could take some time though because of the massive panadol & other painkillers being thrown freely).

It's like you having fever, but the doctor tells you that you are fine and won't feel symptoms as long as you take Panadol. You continue to go to work. Your colleagues and bosses can tell that you are not fine seeing you lose weight by the day. But both of you are assured by the medically qualified doctor that he can increase the dosage of Panadol to counter your symptoms. So you go about your working life as per usual without letting yourself the time to heal. Sooner or later, your body cannot cope even with all the Panadol in your body, to the extent the Panadol got no more effect in your body. The doctor has wrecked your body beyond repair. Your colleagues and bosses fire you from your work because they loss confidence in your capacity to carry on working.

Fever=debt
Doctor=central bank
Panadol=QE and low/zero/negative interest rates
Bosses, colleagues=financial institutions and investors
Yourself=stock market

Simple storyline to simplify the situation.

Sent from HMD Global TA-1004 using GAGT
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Old 10-08-2019, 11:57 AM   #6
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By the way, falling interest rates tend to push stock prices up, ceteris paribus.

Another piece of good news (for stock markets): the U.S. consumer. Consumers in the world’s largest economy have recently boosted their spending significantly (2Q2019 data, released at the end of July), and they don’t appear to be increasing total household debt to do it. All hail the American consumer.

Another piece of good news: the U.S. banking system is healthy. There are some spot concerns in other countries, including a couple major ones. There’s also always a concern about shadow banking. However, by and large the credit markets look like they’ll handle significant stress pretty well if that should come to pass.
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Old 10-08-2019, 12:20 PM   #7
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There’s always “bad news.” Trade skirmishes, for example, aren’t new. The U.S. and Japan had their fierce trade disputes over time, especially in the 1980s. Bad and incompetent U.S. presidents aren’t new either.

I recently took a look at past U.S. recessions — note, the U.S. isn’t in a recession and doesn’t seem particularly inclined to enter one in the near term, but this is merely an example — and how the U.S. S&P 500 performed during those recessions. It looks like the stock market was just as likely to rise as to fall during those recessions. Basically, flip a coin, because the market will probably move sideways, on average, even when the national macroeconomy is contracting.

My biggest concern is climate change, although even that crisis may or may not negatively impact corporate profits and associated stock valuations. There are plenty of companies already profiting from helping to save the planet, and there are more to come. The fossil fuel business (for example) must perish, but that’s just one sector.

There’s also a lot of good news, for example the hundreds of millions of our fellow planetary inhabitants who are no longer living in extreme poverty. In terms of aggregate measures today’s world is, on average, better for humans than it ever has been. We just need to keep working to stay on course toward an even better future, including getting greenhouse gas emissions under control.
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Old 10-08-2019, 12:46 PM   #8
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What bad news?

Fifo opportunities.
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Old 10-08-2019, 12:53 PM   #9
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even pm lee also admit poor economic ahead w trump n xi trade war, china also admit poor economic w their trade issue....

why?
Because TINA
With interest rates so low (and expected to remain low), there are no better alternatives.
Every year, increasing numbers of baby boomers are retiring. They need to stretch their retirement nestegg. Fixed deposits? Bonds? Gold? Bitcoin? Annuities? Nah. Dividend growth stocks that spew out cash is the best option.
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Old 10-08-2019, 01:40 PM   #10
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If one person just based on bad news and short the market, then one gotta pay the high price ? What bad news ?

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Old 10-08-2019, 01:56 PM   #11
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Fed rate falling from >5% in 2007 to <0.5% in 2008 also didn't see stock price goes up, but crashing instead. So no, your statement "falling interest rates tend to push stock prices up" is wrong.

Another piece of big news that has not been priced in: Trade wars. US chip stocks are going face significant drop in profits, but this has not been factored into their stock price yet.

US agricultural sector facing huge drop in profits, but again not factored into stock market yet.

US consumers facing large increases in expenses because of US tariffs on China products, so sooner or later they will cut back, but again not factored into stock prices yet.

All the above will be factored into US stock prices sooner or later.

Regarding banks, no matter how healthy they are, as long as there is bank-run, they will just crash and close shop! So talking about how healthy they are is just pretty useless.

As of now, there is euphoria and so, no news is good news, and even bad news (like Fed cutting interest rate) also can become good news!


By the way, falling interest rates tend to push stock prices up, ceteris paribus.

Another piece of good news (for stock markets): the U.S. consumer. Consumers in the world’s largest economy have recently boosted their spending significantly (2Q2019 data, released at the end of July), and they don’t appear to be increasing total household debt to do it. All hail the American consumer.

Another piece of good news: the U.S. banking system is healthy. There are some spot concerns in other countries, including a couple major ones. There’s also always a concern about shadow banking. However, by and large the credit markets look like they’ll handle significant stress pretty well if that should come to pass.

Last edited by chrisloh65; 10-08-2019 at 02:03 PM..
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Old 10-08-2019, 02:36 PM   #12
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Another piece of big news that has not been priced in: Trade wars. US chip stocks are going face significant drop in profits, but this has not been factored into their stock price yet.

US agricultural sector facing huge drop in profits, but again not factored into stock market yet.

US consumers facing large increases in expenses because of US tariffs on China products, so sooner or later they will cut back, but again not factored into stock prices yet.
looks like all those highly paid fund managers and analysts are useless if they aren't able to forecast this profit drop i guess you can make a lot of money trading against these useless people

i am also still wondering why the market is higher now compared to Jan 2019.... is the news+outlook now so much better than the news+outlook in Jan 2019?
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Old 10-08-2019, 02:48 PM   #13
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Fed rate falling from >5% in 2007 to <0.5% in 2008 also didn't see stock price goes up, but crashing instead. So no, your statement "falling interest rates tend to push stock prices up" is wrong.
If you’re going to quote me, quote me. “Ceteris paribus” means “other things being equal.” Other things clearly weren’t equal in 2007-2009.

Another piece of big news that has not been priced in: Trade wars. US chip stocks are going face significant drop in profits, but this has not been factored into their stock price yet.
Um, I’m highly confident the trade disputes are not secret nor are predictions of negative impacts on chip makers. For example, CNBC reported on Morgan Stanley’s pessimism along those lines in June...2018, over a year ago.

US agricultural sector facing huge drop in profits, but again not factored into stock market yet.
Um, I hate to break this news to you, but the agricultural sector also enjoys massive government largess. U.S. agriculture is facing loss of sales to China, true, but that doesn’t necessarily predict a drop in profits, much less a huge one. To a significant degree U.S. producers will shift their exports to other countries (it doesn’t matter that much whether Country X gets its pork from the U.S. or Canada, which in many cases rides the same ship), other countries will shift their exports to China, and the U.S. government will prop up U.S. agriculture in the areas where such shifts are more than minimally disruptive.

US consumers facing large increases in expenses because of US tariffs on China products, so sooner or later they will cut back, but again not factored into stock prices yet.
Of course those predictions are fully factored into stock prices. They aren’t secrets, and the financial press is full of such stories. Investors have all that information already, and they are valuing stocks consistent with their assessments.

A year ago such forecasts existed, and they didn’t come to pass. U.S. consumers demonstrated surprising strength. Surprises are what drive markets to change, surprises above or below forecasts. Everything you’re describing is already known, already part of the “base case.”

Regarding banks, no matter how healthy they are, as long as there is bank-run, they will just crash and close shop! So talking about how healthy they are is just pretty useless.
The worst you get nowadays is a “silent run,” i.e. large depositors (typically institutions and businesses) that draw down and restructure their deposits to fall below the FDIC’s US$250,000 limit. The regulators stress test that scenario, and others. Banks look rather solid overall. The probability of that sort of financial crisis is currently remote. Steve Eisman is among those who just don’t see any such problems right now. Other problems, maybe, but not that one.

As of now, there is euphoria....
How do you know it’s “euphoria” and not sober markets a few percentage points off their all-time highs weighing the various factors and arriving at reasonable valuations? For that matter, how do you know the bond, oil, gold, real estate, and orange juice markets (to pick some examples) aren’t “euphoric”?
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Old 10-08-2019, 02:50 PM   #14
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It is waiting for a trigger to collapse, just timing problem.
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Old 10-08-2019, 03:13 PM   #15
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i am also still wondering why the market is higher now compared to Jan 2019.... is the news+outlook now so much better than the news+outlook in Jan 2019?
Yes, we have 8 months of additional real data behind us. The sky didn’t fall, basically. Reality generally surprised on the upside; the market consensus forecasts were somewhat too pessimistic. As examples, consumers have been more resilient than expected, inflation has remained too low (frankly), corporate profits have held up rather well (and corporations continue to have massive, growing piles of cash and cash equivalents), and the U.S. Federal Reserve has been accommodating.

Also, Brexit hasn’t happened yet (and might not), China and the U.S. have at least talked, the EU and Japan reached a free trade deal, the U.S. dollar is perhaps a bit stronger than expected (which has some impact on stock valuations when expressed in U.S. dollars), energy prices remain reasonable (something of a surprise too), employment remains robust (along with retirement plan contributions), and we’re 8 months closer to a U.S. election with Trump still slightly disfavored for re-election. A minor surprise here, another there, and it adds up to a market that is mildly, cautiously optimistic about the future, with valuations along those lines.
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