Australian (ASX) Stock Market Forum

Market Bottoms

I think if RE craters it will be exceptionally bad here and already (if we look past Corelogic's creativity) there are signs of big trouble.
In Sydney, Melbourne it needs to, the ponzi scheme over there has needed pricking for some time IMO. It does nothing for the economy, drives up the price of wages therefore services and encourages further speculation.
Like I said time to blow that market out of the water IMO, short term pain for long term gain, on many fronts.
Just my opinion.
 
In Sydney, Melbourne it needs to, the ponzi scheme over there has needed pricking for some time IMO. It does nothing for the economy, drives up the price of wages therefore services and encourages further speculation.
Like I said time to blow that market out of the water IMO, short term pain for long term gain, on many fronts.
Just my opinion.
I agree. But central banks (and gu'mints) have different ideas... and a printing press.
 
So most of the big banks have reported now:

The banking subsector fell as the biggest U.S. lenders set aside billions of dollars to prepare for an expected flood of loan defaults as the coronavirus pandemic all but halted business activity. The flight from risky assets also hit Treasury yields.

Shares of Bank of America and Citigroup Inc dropped as they joined JPMorgan Chase & Co and Wells Fargo & Co in reporting a slump in first-quarter profits.

Screen Shot 2020-04-16 at 8.13.31 AM.png


Hardly a surprise that they fell, more that they fell so little, which again suggests most of the bad news has been already priced in. The banking sector seems to be the sector that has weighed on the overall market.

My guess, we get a bit of churn and then next week banks start to move higher.

jog on
duc
 
Just in regard to the banks: so the Fed offers to buy all debt, impaired or otherwise and the writing is on the wall as to the probability for a recession and impairments. Why would you not sell (potentially) impaired loans to the Fed and clear them off of your Balance Sheet?

Of course you would.

Then in Q1 earnings you reserve for impairments (that have now been sold) and report as such. In Q2 earnings, those reserves can reappear on the Balance Sheet for a nice upside surprise.

Now I have no idea whether that has actually happened, but I would't be shocked if it were.

jog on
duc
 
Just another example of a crash

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This was a pretty quick recovery however.

*Current news

NEW YORK (AP) — The government’s lending program for small businesses is on hold.

The Small Business Administration said Thursday that it reached the $349 billion lending limit for the program, after approving nearly 1.7 million loans.

Thousands of small business owners whose loans have not yet been processed must now wait for Congress to approve a Trump administration request for another $250 billion for the program. Lawmakers have been haggling over whether to extend the program as it stands now, or whether to add provisions that, among other things, would help minority businesses. It’s unclear when they might reach an agreement that would allow loan approvals to continue.

Down the road, if loans are not approved, I see litigation. Essentially, government decrees that I cannot work and then fail to compensate me for that...in the US, that could become very contentious.


jog on
duc
 
So we have had negative headlines with bank earnings, economic data, etc. The market has absorbed it reasonably well. Nothing major as far a declines go.

Now we have some positive news, albeit heading into the w/e, always tricky...but it will be interesting to see how the market reacts to some positive news.

Among the items: Boeing announces the resumption of airline production with about 27K workers at its Puget Sound-region facilities next week. Shares are up 7.5% after hours (after losing 8% in the day's regular session).

The White House has put pencil to paper and put out its phased guidelines for reopening the economy. No dates are given, with the president leaving that detail up to individual governors. More coming at the coronavirus briefing later this evening.

The Mayor of Jacksonville, FL has announced the partial reopening of beaches as of 5 PM ET on Friday.

Gilead is running higher on hopeful buzz from a study out of Chicago for its remdesivir in severely ill COVID-19 patients.

Uber and Lyft are each ahead about 6% after hours following Uber's announcing Q1 and Q2 charges which perhaps weren't as bad as feared.

S&P 500 (NYSEARCA:SPY) futures are up 2%, and Nasdaq (NASDAQ:QQQ) up 2.5%.

jog on
duc


 
Just another historical chart:

Screen Shot 2020-04-18 at 6.34.54 AM.png


Never really considered the 2000-2010 as a lost decade before. Puts the current market into a totally different perspective. Some of the best returns have been available to investors during this period. Of course you would need to buy near the bottom and rebalance near the tops: which is eminently possible, just not easy.

Beware Economists:

Screen Shot 2020-04-18 at 7.01.30 AM.png


Both are still active, but I'm not aware of their calls or even if they have made any.

Last nights 'good news' started out well and then fell away, likely due to fear of holding over the w/e and news that has market impact being released over the w/e. That has been (through the 2008 market) a pretty standard pattern.

jog on
duc
 
So last week we had some of the big banks report. Their earnings (reserves) were execrable. Yet, the market absorbed them without a murmur and finished higher.

This week:

Earnings season ramps up next week with major companies like Delta Air Lines (NYSE:DAL), AT&T (NYSE:T), Coca-Cola (NYSE:KO), IBM (NYSE:IBM) and Lockheed Martin (NYSE:LMT) set to give their varying outlooks on the pandemic and the road ahead.

All told, about a fifth of S&P 500 companies will report results before the closing bell on Friday. Investors already know that profit will be down in Q1 and Q2. The bigger questions are if share prices properly reflect the downturn and how well balance sheets will hold up.

On the economic front, updates on existing home sales, new home sales and durable goods orders are due to drop, as well as another jobless claims report (~4M anticipated). Sports fans will get a small dose of action when Disney's (NYSE:DIS) ABC and ESPN air the NFL Draft on April 23-25.

I'm interested in LMT as it is a member of DFEN and will give a heads up as to how that sector might look going forward. IBM for tech (although its no longer the bell-weather it once was) and KO for the consumer sector, might give some indication of their respective sectors.

As to economic news, fuhgeddaboutit, it will be bad. Everyone knows it will be bad. I doubt the market even blinks.

Parsing the earnings/economic reports is separating the signal from the noise. Of course, by the time we see the reports etc, the market is already moving/moved, so decisions have to be made after the fact. You simply have to decide if the move is signal or noise and adjust your positions moving forward. It helps to have a (firm) grasp of what happened in previous downturns. From there you apply (a subjective) measure or comparison to the current news.

Is it (truly) different this time?

jog on
duc
 
I have found a post on another forum - "an interesting article on the VIX, which suggested, after an analysis of bear markets since 1990 that (with two exceptions, being after 9-11 and around the bankruptcy of LTCB) the VIX almost always hits its high well before the bear market registers its final low. The average lead time of the VIX’s peak to the bear market low was 90 days, so as the VIX hit its latest peak on March 16, the projected low is June 14. " and also on a site https://www.thestreet.com/opinion/when-the-bear-market-will-hit-bottom
where their view is a 75 day lag after the VIX peaks, so between the two articles, a potential low somewhere in early June, assuming the VIX does not go higher again.
Seems like the correction / next downleg is starting this week with maybe a low in June??

Iggy
 
I have found a post on another forum - "an interesting article on the VIX, which suggested, after an analysis of bear markets since 1990 that (with two exceptions, being after 9-11 and around the bankruptcy of LTCB) the VIX almost always hits its high well before the bear market registers its final low. The average lead time of the VIX’s peak to the bear market low was 90 days, so as the VIX hit its latest peak on March 16, the projected low is June 14. " and also on a site https://www.thestreet.com/opinion/when-the-bear-market-will-hit-bottom
where their view is a 75 day lag after the VIX peaks, so between the two articles, a potential low somewhere in early June, assuming the VIX does not go higher again.
Seems like the correction / next downleg is starting this week with maybe a low in June??

Iggy

That is definitely what I have noticed, although I don't really count the days.

jog on
duc
 
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