***Official*** 2016 Stock Market Thread

[Imp]

The Nikkei dumped 5.4%... I don't follow the Nikkei but that can't be good. China's got a week long break or something.

 

[11thHour]

I'm concerned about Canadian banks. What else do they finance aside from commodity companies (pretty much all in the shitter) and property/mortgages (bubble may be bursting). Smaller oil companies should start defaulting within the next few months. And jingle-mail is happening in Alberta...

http://www.cbc.ca/news/canada/calgary/jingle-mail-alberta-housing-1.3430867

Thank goodness they're too big to fail and the gubment will print money to bail them out -- hence why 95% of my money is USD.

I fear for Canadian real estate...

 

[Charmonium]

LOL, ECB & Fed run ZIRP and NIRP, end up hosing their own banks that can't make money due to lack of spread between deposits and loans. You gotta love modern monetary policy.

I think it has more to do with economic outlook. Monetary policy normally affects the short term market. The fed had to go out of its way with operation Twist to drive down long term rates.

There doesn't seem to be much demand for long term credit so those rates drop, especially when inflation expectations seem to be nominal and possibly negative.

Look at the 2/10 year spread. It's the lowest it's been since just before the '08 recession.

 

[FelixDeCat]

Down she goes. Again. :/

 

[Michael]

On Tuesdays I post a blog entry on topics from my career. Today it is on smoothing numbers when reporting.

http://mgpotter.com/smoothing-your-numbers/

Hopefully people here find the entries interesting when trying to understand companies.

Michael

 

[jpiniero]

They're not going to raise rates until they see how the economy is doing. Speculation about a March hike is completely wrong.

It doesn't have to be in March. It could be June or July or whatever. Until someone at the Fed comes out and admits they aren't raising it again anytime soon, Wall Street's going to assume they are going to raise it soon and continue to do so until it gets into historical range. And as that happens, stock valuations will have to correct to back into historical ranges as well.

 

[Imp]

Look at the 2/10 year spread. It's the lowest it's been since just before the '08 recession.

Interesting chart when stretched to maximum time-span (1976 on). Is it going to blip back up like around 2013-ish or go down to the zero in 1989, 1999, and 2008?

Funny, looking at a chart for the S&P500, the index has been on a general uptrend since 1980 with no major corrections until 2002 and 2008. Trying to best-fit the line, looks like we should be around 1000 points right now.

 

[Imp]

Interdasting... That yield curve thing happening in Canada too. Except it seems way further along.

...yields on the five-year Government of Canada bond have begun creeping below the central bank’s overnight lending rate of 0.5 per cent. On Tuesday, they traded at roughly five basis points below that mark.

http://business.financialpost.com/n...ramatic-bank-of-canada-action-and-a-recession

This is going to be a great year.

Oh, and the Nikkei is tanking again.

 

[Charmonium]

I looked up the curve for Canada and as of the end of last year, it looks pretty normal so I'm not sure I understand what they're saying.

Inversion means that short or intermediate rates are higher than long rates. So you can have a small increase going from say 3 mo. to 2 year but after that rates drop off. Or you can a straight inversion when short rates are higher than intermediate and long.

Neither of those situations seem to appertain in Canada based on the info I could find.

 

[Imp]

Alright, I clearly don't know my bonds.

Canada isn't and won't be doing well though.

 

[Imp]

Oil is down to low $27 again... how long before it rallies to $33 again based on a rumor?

If I had balls, I would go all in on a triple leveraged oil ETF...

 

[11thHour]

Oil is down to low $27 again... how long before it rallies to $33 again based on a rumor?

If I had balls, I would go all in on a triple leveraged oil ETF...

I want to get in on this but I'm thinking it's got more space and time to cover and that might have been a dead cat bounce.

On a far distant note...what about cruise ship stocks? Fear of travel/zika, low fuel costs, inexpensive vacations...

Royal Carribean
Norwegian
Carnival

(or perhaps zika would be just as worrisome at cruise port locations, so bad deal?)

 

[FelixDeCat]

Yeah, sell.

UPL going to zero.

 

[Udgnim]

Yeah, sell.

CHK going to zero.

yeah, actually worried about this downturn.

initially thought it was negative sentiment again similar to August - September 2015, but recent news over worries about Euro bank solvency has me thinking this is an acknowledgement of a shift in fundamentals.

seems 2016 needs oil price to start a sustained recovery upwards, otherwise 2016 is not going to be a pretty year

 

[Exterous]

I basically 80% in right now.

I am still less but more than I expected. I knew I would be very busy for a while starting last week so had things a bit more on automatic mode leaving only my 'almost certainly won't fill' orders up. So I was a bit surprised when my LOW order filled at $63.05. At least it joins WMT (November @ $57.05) as my recent stock purchases that have done well this year after I purchased them.

Still - none of the companies I picked up are bad or risky companies so I am not too worried about their price. A few might not recover but the majority more than will and I'll collect their dividends in the meantime.

 

[Charmonium]

seems 2016 needs oil price to start a sustained recovery upwards, otherwise 2016 is not going to be a pretty year

In theory, low oil should benefit the economy overall. And I think that once people adjust to the idea that prices will stay low for the foreseeable future, they'll be more inclined to spend what they are saving on oil rather than using it to pay down debt or increase savings.

As of right now, I think everyone including companies are still gun shy. No one wants to hire until they absolutely have to. Corps are buying back stock and building up cash reserves. Just look at this chart.

As a result money velocity has fallen off a cliff since the recession.

So even though the economy is strong, there's still a pervasive malaise that is blunting growth.

 

[ponyo]

They're trying to break the banks and the s&p today but it feels like they're pressing. Gold broke through $1200 and is up $54 today. Gold is going to hit all time high in Canadian and Australian dollars if this keeps up.

 

[sm625]

So even though the economy is strong, there's still a pervasive malaise that is blunting growth.

The problem is that the economy isnt strong. There was never a real true recovery from the last recession. At some point, the majority of market participants must realize that waiters and bartenders do not an economy make. The only parts of the economy that actually boomed were healthcare and oil. Well the oil boom is done. Healthcare is almost completely government debt driven. Even if the debt machine is able to keep on feeding the healthcare bubble, that is by no means a sign of a healthy economy. The simple fact is that we are far worse off than we were in 2007. This hasnt mattered too much because of all the money printing and stock buybacks. The fact that the market is declining even despite all the buybacks should be of paramount concern. A bloomberg article from yesterday stated that Goldman Sachs told clients this week that buybacks are accounting for nearly 20 percent of trading volume. That should have people running around with their hair on fire.

 

[Charmonium]

Relative to before the crash, I wouldn't be surprised if the economic numbers (leading indicators) aren't as good. Even housing starts are only about half what they were pre-2008. But we've had growth. Anemic growth, but still growth. That might turn around now due to the confluence of factors like a strong dollar, weak int'l markets, the evisceration of most commodities and therefore all of the industries that support mining and refining, increase in savings rate, lower capex across the board, etc.

 

[Imp]

They're trying to break the banks and the s&p today but it feels like they're pressing. Gold broke through $1200 and is up $54 today. Gold is going to hit all time high in Canadian and Australian dollars if this keeps up.

I was thinking about going all-in or substantially into gold last night with an ETF like GLD or IAU because of doom & gloom... then I checked the historic gold prices. Holy. Shit. You could buy a ton for pocket change up until like the early 2000s. And it's been correcting back down to that low value steadily since 2011-ish.

The problem is that the economy isnt strong. There was never a real true recovery from the last recession. At some point, the majority of market participants must realize that waiters and bartenders do not an economy make.

I graduated in 2008 so that's been my belief and my observations for the last 8 years.

 

[ponyo]

What I'm scared of.

1) DB
Lower than 2008 world financial meltdown and in serious trouble.
2) CS
27 year low and will also go under if DB goes
3)China

What tools are left for the central banks? Negative interest rate?

 

[ponyo]

I was thinking about going all-in or substantially into gold last night with an ETF like GLD or IAU because of doom & gloom... then I checked the historic gold prices. Holy. Shit. You could buy a ton for pocket change up until like the early 2000s. And it's been correcting back down to that low value steadily since 2011-ish.

Gold price hit all time high of $1,791 CAD on 9/22/2011. It's $1,729 CAD today. Gold has good chance of breaking all time high in CAD very soon. What correction?

 

[sm625]

Oil is down to low $27 again... how long before it rallies to $33 again based on a rumor?

If I had balls, I would go all in on a triple leveraged oil ETF...

Back on post #24 I said that mid February was a likely bottom for oil. That technical view has only been reinforced since then. But forget the ETF. Why not go for the jugular with $9 USO March calls? Could be a 20 bagger.

 

[FelixDeCat]

lol

 

[brianmanahan]

Gold price hit all time high of $1,791 CAD on 9/22/2011. It's $1,729 CAD today. Gold has good chance of breaking all time high in CAD very soon. What correction?

shoot, i didn't realize the CAD had dropped in value that much

or that the USD had appreciated that much