M&A Activity is little more than rumor at this point, and bad rumor at that. Sure, there will be some deals done, but the pace has and will continue to markedly slow. Q1 earnings were okay, but if you look at the actual data, many companies that beat (lowered estimates, by the way), did so disproportionately by cost cutting measures, which boosted net revenues (a lot of companies outright missed, too). Stock buybacks occurred on a tear for the last 9 months, but this is slowing, too (if someone has aggregate buyback data with specific time frames, please post it). The U.S. economy undeniably continues to weaken, and consumers are starting to once again increase their credit card debt at a very high rate (much of that debt is from inelastic products like gasoline, groceries and medications). Housing and subprime represent an undeniable obstacle, and even drag, on consumer and business investment (the former, directly, the latter, indirectly). Private equity is buoyed by the carry trade and ridiculously complacent capital pools, fueling purchases of assets priced at the peak of the business cycle, not the trough - no matter, the managing partners are making big cash. Now that the U.S. equity market has gained in 10 months what it historically typically takes to gain in years: Where do you think the catalyst for future share appreciation will come from? Or is the greater fool theory already at work And if so, who is the fool? The buyer or the seller?
Its been at work for months already though more in foreign markets than in US markets. Liquidity crunch coming up shortly either way.
I am rarely confident of future projections. On this one, I will make an exception. I couldn't agree more.
I don't see anything...near-interest free borrowing seems to have been a big catalyst...the problem is, who pulls out of the game first and can make the money leaving others holding the bag? I don't know, I'd expect to see a few hedge funds go belly up and some big funds do the ugly dance...we'll see though.
http://www.marketwatch.com/news/sto...75-AF21-4FE7-BCA3-1C5EFB7DDB5F}&dist=hplatest This is also certainly not a big plus for the markets.
Yes, the yen carry trade is a real and quantifiable risk, if it unwinds. I believe it is, anyways. I think it will decimate quite a few over-leveraged hedge funds (is that redundant? Over-leveraged hedge funds). Here's the real core issue. How much risk does one want to assume trying to get what might be a remaining few pieces of gold from the mine, when the mine is groaning from stress and about to collapse, and there is a nice pile of accumulated gold you are guaranteed, if you don't wander back in?