“Rally will end as stimulus fade & credit bubble caused by easy $ disappears"

Discussion in 'Wall St. News' started by ByLoSellHi, Oct 29, 2009.

  1. Who do you believe?

    “Such echo rallies are never as big as the original one and we will see it fading away,” Ruchir Sharma, 35, who oversees $25 billion in emerging-market stocks at Morgan Stanley, said in an interview in Mumbai. “The rally will end as the effects of the stimulus begin to fade and the credit bubble caused by easy money disappears.”


    “The fourth quarter will be the Waterloo of the bears,” said E. William Stone, who oversees $102 billion as chief investment strategist at PNC Wealth Management in Philadelphia. “We are in economic recovery both in the U.S. and globally, so you will eventually see revenue growth because you are seeing the recovery hold.”


    The U.S. economy faces “serious bumps” ahead that are likely to slow the pace of growth, Nobel prize-winning economist Joseph Stiglitz said. The economy won’t be expanding quickly enough to reduce unemployment, Stiglitz told a press conference in Beijing today. The economy will enter “a very gloomy period” of high unemployment, economist David Malpass, president of Encima Global in New York, told Bloomberg Radio.


    “The stock rally is not over yet,” said Jeffrey Kleintop, who helps oversee about $247 billion as chief market strategist at LPL Financial in Boston. “The stock market can celebrate. This news is an important confidence boost, in particular to individual investors.”

    This quarter was stacked full of incredibly lowered analysts' surveys on earnings' expectations, but remember kids:

    Earnings-per-share have exceeded the average analyst estimates at 81 percent of the companies in the S&P 500 that posted third-quarter results so far, which would be a record proportion for a full quarter, according to Bloomberg data going back to 1993. Still, profits have decreased 23 percent on average for the 295 companies that reported since Oct. 7.


    Companies beat through a combination of rigged Wall Street chicanery on earnings projections, along with massive costs cuts (which they will not be able to duplicate going forward - no way).

    Caveat Emptor.
  2. More than 80 percent of major companies reporting third-quarter results this month have beaten Wall Street expectations. So is business that good? No. Are companies gaming the system? Yes.

    Corporate America has a habit of low-balling the earnings forecasts used by analysts to determine their estimates. That way, the bar is lower, and companies can easily jump over when the quarter's results are announced -- even if profits and revenues have fallen off a cliff.


    [P]rofits have decreased 23 percent on average for the 295 companies that reported since Oct. 7.

    These companies couldn't even beat anemic, woefully soft profit targets.

    What a sad, pathetic game...

  3. well. after a 60% straight up rally off the bottom you would have to be clueless not to expect some kind of selloff.