If you turn on the financial news networks they will be harping on the fact that while 70% of companies are beating earnings estimates just 42% are exceeding revenue estimates. Most fail to also point out that S&P 500 earnings in aggregate are at record levels. So, if earnings are at record levels it should not be shocking that the market is moving higher.
Is the market due for a massive correction now that it's reached all-time highs? Or, is it getting ready to make, what Stan Weinstein calls, a "run for the roses"? Here, Stan shares his views on the market in this preview to Saturday's Financial Sense Newshour.
The global economy is slowing as are inflationary pressures. This is the type of backdrop from which we have seen increased monetary stimulus. If the past history of the last three years has been any guide, we should expect the world’s biggest central banks to begin easing once again, with any talks of “tapering” largely premature.
Martin Armstrong is the founder of Princeton Economics and developer of the cycles-based Economic Confidence Model, which has been cited by numerous publications for pinpointing major turning points in the market.
On the heels of the greatest financial crisis since the Great Depression, powerful forces have conjured up vast sums of money from thin air, all in hopes that their concerted efforts will help transform the paper rags of yesteryear back into wealth and riches.
There is a debate going on right now about the strength of the market. Some do not like the fact that the market is being led by more conservative sectors: health care, staples, and utilities. They argue that at this point we should see more growth oriented segments of the market doing better. They also point to recent economic releases and quarterly earnings as signs of a weak market ahead.
The market has been engaged in a balancing act for six weeks now between being made optimistic by 1st quarter earnings that are mostly beating estimates, and concerns about relentless negative economic reports. As a result it has made no further progress over the last six weeks. Here's why next week's economic reports are likely to change that in one direction or the other.
For the past few months, there have been some catalysts that have depressed commodity prices. The number one reason has been the rally in the dollar caused by Italian elections, Cyprus’ banking issues, strong U.S. economics, and anticipation of Japanese easing monetary policy.
Earlier in the month I suggested that we would likely hit a soft patch in Q2 and projected that the markets would remain weak through most of May. However, given the risk of recession remains a remote possibility, any pullback in the markets would serve as a buying opportunity. I believe the U.S. economy is still on a growth trajectory and if an economically weak Europe can re-energize in the second half, then the markets should head higher with cyclical sectors leading the charge.
One of the apparent conundrums of US Fed money printing in the current cycle is lack of headline inflation, at least as measured by the CPI. Certainly the CPI calculation itself is open to debate in terms of whether it is accurately depicting the cost of living in the US.