The Markets Are Tumbling (Again)

oldman

oldman

Well-known Member
Location
PA
What the heck is going on with the markets? I wouldn't be surprised to see the markets test the August lows and then maybe even go lower. The NASDAQ is already negative for 2015, so what about the S&P? It's all very confusing as to what is really causing this volatility. Of course, with China, Greece and Puerto Rico all having financial and economy problems, not to mention some South America and Russia add-on's, it's all very over-whelming. I think Yellen made a mistake by not raising interest rates last week by at least 25 basis points or a 1/4%. A rise in interest rates would have shown a confidence in the economy. I think later today, she is expected to give her take on the economy and anymore bad news could cause some really severe digestive problems for us investors.

I read that Caterpillar is expecting to cut another 10,000 jobs by 2018 and have lowered their guidance for the rest of this year, yet the new housing market just reported their highest gains in seven years. Looking at everything out there and all of the good and bad news, what's happening with the markets makes very little sense and unless we see a rally in Q4, we could be headed for a very interesting election year. As is the usual, election year politics are normally tied to the markets.
 

If you look at S&P earnings, there is no growth.
A great predictor I like to use is Shiller's cyclically adjusted PE ratio (CAPE). It has proven to be a great predictor of market returns over the coming 10-years.
Right now it suggests that annual stock market returns over the next 10-years will average 3-5%.
Not a great time to be in. That doesn't mean the market will crash - I am not one that believes it will. But it can sideays for a long time.
 
The markets make perfect sense if you are looking globally rather than domestically. Since 70% of S&P 500 profits come from outside the US, what happens in Asia, Latin America and Europe is much more important than a slowdown here. Yellen was begged by the EU not to raise rates right now; the Fed agreed to skip a Sept raise but will probably go ahead with an increase next mtg unless the immigrant crisis segues into an overwhelming crisis for Germany's leadership--which is something I judge very high on the probability scale.
 

I have only pre-school knowledge of the markets. Something to do with China led to the big drop awhile back. But they said something to the effect of it being something expected. That I guess the market cycles and the last decade or so has been high so it has to drop to stabilize. It's like opera, one of those things that's always gone over my head.
 
The housing market is reporting gains because there's a sizable pent-up demand. Builders slowed or stopped new projects during the recession, while foreclosures selling for bargain prices caused current homeowners to stay put. Now the foreclosures are pretty much down to a negligible % of the overall market, no longer capping gains. Unemployment has dropped, buyers are back in force but many homeowners are not moving up as before. Below-average inventory means higher prices/bidding wars.

One local RE agent is running TV ads saying not to bother fixing your house up; the market is so hot because of low inventory that houses are selling regardless of condition.

As for the markets fluctuating, NY Times/Bloomberg reported 9/28/2015 that the Saudis have withdrawn an estimated $70 BILLION from world markets to balance their budget: sliding oil revenues and the war on Yemen created the big deficit. When you have A Biggie Investor selling off to raise cash, of course markets will fall!
 
Davey Jones said:
Wait for the "correction" its coming soon.
Click to expand...
I would argue that a correction has already started.
The markets have been in a distrubution top since January 2015 with many of the leaders finally breaking down. It is /was a very old bull market.
Now it's just a question of what form the correction will take and at what stage the Fed steps in once again.
The Fed has got to get out of the business of supporting markets.
 
Corrections happen all the time. I wouldn't hold my breath waiting for Armageddon, having watched the market meltdowns happen about every ten years or so, over the last 60 yrs.
 

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