Running on, uh, Vapor


This Is the Reason Stocks Haven’t Fallen Yet

Casey Daily Dispatch
3/14/16

This bull market is still “technically” alive. The popular definition says a bull market ends when an index falls 20%. Since peaking in May, the S&P 500 has dropped a maximum of 15%. … Although “mom and pop” investors have been dumping stocks, U.S. corporations have been buying their own shares at a near-record pace. … Since 2009, S&P 500 companies have shelled out more than $2 trillion on share buybacks. …

Buybacks are about the only thing keeping the stock market afloat. …

Dispatch readers know the Fed has held its key interest rate near zero since 2008. It’s made it comically cheap for U.S. companies to borrow money. … As a result, U.S. corporations have loaded up on cheap debt. …

The Securities Industry and Financial Markets Association reports that U.S. corporations have issued $9.7 trillion in new debt since 2008. Last year, U.S. companies issued more than $1.5 trillion in new debt, which set a new all-time high.

Many companies have used this borrowed money to fund share buybacks. … But remember, individual investors are no longer buying stocks. Corporate America is the only buyer still standing. …

E.B. Tucker, editor of The Casey Report, thinks stocks are on the verge of a major decline… In short, E.B. thinks U.S. stocks will enter a bear market before summer. One of his favorite “big picture” tools is flashing a warning sign we haven’t seen since the financial crisis. Investors who sold their stocks when this warning appeared in 2008 avoided a 43% loss. …

(Read More)

==================================

These Are The Energy Bonds Most Likely To Default In The Next Six Months

by Tyler Durden on 03/15/2016

the dire reality of the default wave about to be unleashed in the shale patch has been swept under the rug, if only briefly.

That is about to change.

In a recent interview with Bloomberg, Fitch’s Eric Rosenthal paints a very disturbing picture: the rating agency senior director predicts that about $40 billion worth of energy debt will likely default in 2016. …

============================================

Margin Debt Flashes Red As The Fed Cometh

by Tyler Durden on 03/15/2016

… One of the things I have addressed in the past is the importance of margin debt. … One of the key reasons why the October lows have been defended so vigorously over the last several months is a break below that level will begin to trigger margin calls. … the buying power for equities, that came from using margin, has likely reached its limits. As shown in the chart below,courtesy of ValueWalk, households are once again fully invested in financial equities. …

If the markets fail to rise above the short-term moving average and then correct below the long-term, which has currently been acting as support, that will be the beginning of a confirmed bear market cycle.

Conversely, if the market can rally above old highs and, reverse the two lower sell signals, the bull market will be reconfirmed and equity exposure will need to be increased. Of course, at this moment, given the economic and fundamental backdrop, this is a low probability event. Note: I did not say it was IMPOSSIBLE …

Advertisements

About icliks

Biding my time in central ms ... yours too, if ur reading this.
This entry was posted in credit bubbles, financial crash, Investing, maket timing, market crash and tagged , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.