Home » Posts tagged 'nyse'
Tag Archives: nyse
Sizing Up the Bubble
Sizing Up the Bubble
“In the ruin of all collapsed booms is to be found the work of men who bought property at prices they knew perfectly well were fictitious, but who were willing to pay such prices simply because they knew that some still greater fool could be depended on to take the property off their hands and leave them with a profit.”
Chicago Tribune, April 1890
Presently, the broad NYSE Composite Index is at a lower level than it set more than 2 years ago, in July 2014. Including dividends, the index has gained hardly 2%. Several indices dominated by large capitalization or speculative growth stocks, particularly the S&P 500, have performed better, but even here, the index is only a few percent above its December 2014 high. Over the past two years, the behavior of the stock market can be described less as an ongoing bull market than as the extended topping phase of what is now the third financial bubble since 2000.
The chart below shows the current setup in the context of monthly bars since 1995. After the third longest bull market advance on record, fresh deterioration in key trend-following components within our measures of market internals (see Support Drops Away) recently joined this extended, overvalued, overbought, overbullish peak, even as the S&P 500 hovers at the top of its monthly Bollinger bands (two standard deviations above the 20-period average) and cyclical momentum rolls over from a 9-year high. Taken together with other data, we continue to classify present conditions within the most hostile expected market return/risk profile we identify.
The great victory of the Federal Reserve in the half-cycle since 2009 was not ending the global financial crisis; the crisis actually ended in March 2009 with the stroke of a pen that changed accounting rule FAS157 and eliminated mark-to-market accounting for banks (instantly removing the specter of widespread insolvencies by allowing “significant judgment” in valuing distressed assets).
…click on the above link to read the rest of the article…
TSX falls 373 points as commodities sell off again
Canadian dollar loses almost half a cent to close at 74.66 cents US.
Canada’s benchmark stock index lost almost 2.8 per cent on another bleak Monday for commodities like oil, gold and copper.
The S&P/TSX Composite Index lost 373 points to close at 13,004. That’s the lowest level for Canada’s benchmark stock index since October 2013.
The TSX is now down by almost six per cent since the start of September. If that holds until Wednesday, the last day of the month, it will be the worst month for the index since 2012, and the June-to-September period would be the worst three-month period for Canada’s benchmark stock index since 2011.
Almost all of the sub-sectors were lower. Commodities were especially hard hit as the December gold contract fell $13.40 to $1,132.20 US an ounce and the November crude oil contract was down $1.23 at $44.47 US a barrel.
The gloom in commodities was largely tied to more news out of China about that country’s slowing economy. Profits at Chinese industrial firms dropped by the largest amount on record since Beijing started releasing the data in 2011.
“Whenever the market is down, the first place to look these days is China,” John Manley, chief equity strategist at Wells Fargo Fund Management, told The Associated Press.
“Right now, we need evidence that China is not slowing that much and that profits are still going to be OK.”
Alcoa splitting in two
In corporate news, one of the world’s largest mining companies, Alcoa, was a bright spot for mining stocks with the stock rising about six per cent on the NYSE. But that optimism was only because the company announced it was splitting itself into two, to insulate its growing and profitable aerospace and automotive business from its sagging base metals business, which primarily consists of aluminum assets.
Prior to Monday’s bounce, Alcoa shares had lost more than 40 per cent this year as the price of metals cratered.
The Canadian dollar lost almost half a cent amid the gloom, to close at 74.66 cents US.
…click on the above link to read the rest of the article…
It’s easy to deny a bubble but impossible to deny its implosion.
It’s easy to deny a bubble but impossible to deny its implosion.
We’re having the kind of day when the New York Stock Exchange felt compelled toannounce very encouragingly before markets opened that it would halt trading for 15 minutes if the S&P 500 drops 7% to 1,833 before 3:25 p.m. Once trading restarts and the index plunges 13% before 3:25 p.m., trading would be suspended for a second time. If the index plunges 20% at any point today, NYSE would shut the market entirely for the rest of the day.
Monday’s meltdown commenced in Japan.
A follow-on to Friday’s debacle. The Nikkei started out in the hole and dove from there, ending the day down 4.6%. This is a market where the central bank has a mega-QE program in place with an explicit policy to buy equities to inflate them. Yet, despite the furious efforts by the Bank of Japan’s trading desk, the Nikkei dropped to 18,541, down 11.5% since June, the lowest since February.
It was in reaction to a whiff of panic in China, triggered by a total loss of faith in the government’s and the central bank’s machinery designed to prop up the markets.
The Shanghai Composite Index opened down nearly 4% and went to heck from there, closing at 3,210, down 8.5%. It annihilated the entire phenomenal bubble gains this year.
The thing is, the government vowed to support the stock market when it hit the “policy bottom” of 3,500 to 3,600 points. Now that it crashed through what was nothing but a line in the sand, hopes have shifted down to a new line in the sand of 3,000 points.
In all Chinese stock markets, only 12 stocks rose, and 2,200 stocks hit their 10%-down limit.
How to Prepare for a Cyber Attack
How to Prepare for a Cyber Attack
There is a lot of debate on whether Wednesday’s computer issues that shut down the New York Stock Exchange, the Wall Street Journal, and United Airlines were just a very strange coincidence (very strange) or a deliberate cyber attack
This isn’t the first possible cyber attack on the United States this year. Heck, it’s not even the first one this summer. On June 5, Reuters reported a breach occurred that comprimised the personal information of millions of federal employees, both current and former. This breach was traced back to a “foreign entity or government.”
Regardless of the origin of the so-called computer”glitches” that shut down Wall Street and a major airline, the events of Wednesday gave us just a tiny glimpse at how serious a cyber attack could be.
What exactly is a cyber attack?
A cyber attack is more than just shutting down the computer systems of a specified entity. It is defined as “deliberate exploitation of computer systems, technology-dependent enterprises and networks. Cyberattacks use malicious code to alter computer code, logic or data, resulting in disruptive consequences that can compromise data and lead to cybercrimes, such as information and identity theft.”
Technopedia lists the following consequences of a cyber attack:
- Identity theft, fraud, extortion
- Malware, pharming, phishing, spamming, spoofing, spyware, Trojans and viruses
- Stolen hardware, such as laptops or mobile devices
- Denial-of-service and distributed denial-of-service attacks
- Breach of access
- Password sniffing
- System infiltration
- Website defacement
- Private and public Web browser exploits
- Instant messaging abuse
- Intellectual property (IP) theft or unauthorized access
Cyber attacks happen far more frequently than you might think. Check out this real-time map for a look at the almost constant seige.
…click on the above link to read the rest of the article…
What In The World Just Happened To The New York Stock Exchange?
What In The World Just Happened To The New York Stock Exchange?
Do you believe that the New York Stock Exchange shut down because of a “technical glitch” on Wednesday? At 11:32 AM on Wednesday morning, trading on the New York Stock Exchange was halted due to “internal technical issues”, and it did not resume until 3:10 PM. Officials insist that there is no evidence that a cyberattack caused the technical problems even though hactivists had hinted that something may happen the night before. Adding to the suspicion is the fact that United Airlines and the Wall Street Journal also experienced very serious “technical glitches” on Wednesday. Others found it very curious that trading on the NYSE was halted just after Chinese stocks had absolutely plummeted the night before. In fact, Hong Kong’s Hang Seng Index experienced the largest one day decline that we have witnessed since November 2008. So is there more going on here than meets the eye?
Overall, the Dow was down 261 points on Wednesday, and the Dow and the S&P 500 both closed below their 200 day moving averages. Iron ore had its biggest daily price drop ever, and the price of oil continued to decline. But it was the stunning shut down of the New York Stock Exchange that made headlines all over the world…
The New York Stock Exchange, United Airlines and the Wall Street Journal have all fallen victim to a series of massive technical glitches within hours of each other.
NYSE halted all trading for ‘technical reasons’ at 11:32am and only reopened at 3:10pm – but says the problem is an internal one and not the result of a cyberattack.
It comes as tens of thousands of United Airlines passengers were stranded at U.S. airports on Wednesday morning after all of the carrier’s flights were grounded nationwide due to a computer system glitch.
The Wall Street Journal was also left unable to publish after its systems came under attack and has been forced to switch to an alternative site design.
…click on the above link to read the rest of the article…
How Much More Extreme Can Markets Get?
How Much More Extreme Can Markets Get?
These charts help us understand that a top is not just price, but a reversal in extremes of margin debt, valuation and sentiment.
In blow-off tops, extremes of valuation, complacency and margin debt can always shoot beyond previous extremes to new extremes. This is why guessing when the blow-off top implodes is so hazardous: extreme can always get more extreme.
Nonetheless, extremes eventually reverse, and generally in rough symmetry with their explosive rise. Exhibit 1 is margin debt: NYSE Margin Debt Hits a New Record High (Doug Short)
Note the explosive rise in margin debt in the past few months:
At tops, soaring margin debt no longer pushes stocks higher. I’ve marked up an excellent chart by Doug Short to highlight the diminishing returns of more margin debt at tops.
It’s clear this same dynamic of diminishing returns is in play now, as margin debt has skyrocketed while the S&P 500 has remained range-bound, with each new high being increasingly marginal.
Exhibit 2 is China’s Shenzhen stock exchange. The price-earnings ratio (PE) is a useful gauge of sentiment: when sentiment reaches extremes of euphoria, PEs go through the roof:
…click on the above link to read the rest of the article…
Some Folks At The Fed Are Lost——No Juice To The Macros, Part 1
Some Folks At The Fed Are Lost——No Juice To The Macros, Part 1
Yesterday we demonstrated that stock market valuations are not merely “on the high side” as Janet Yellen averred last week. Instead, they are positively in the nose-bleed section of history.
You don’t get the Russell 2000 trading at 90X honest-to-goodness GAAP earnings or 125 biotechs with aggregate LTM losses of $10 billion sporting a combined market cap of $280 billion unless you are deep into bubble land. In fact, the chart on the median PE multiple for all NYSE stocks bears repeating.
Recall this graph is based on trailing GAAP earnings for all companies with positive income. But that was for the LTM period ending in June 2014. Since then the market is up by 7%, yet reported earnings have basically flat-lined. S&P 500 earnings for the June 2014 LTM period, for example, were $103 per share——-a level that has now dropped to $102 per share for the December LTM period.
In short, the median NYSE valuation multiple is now at upwards of 22X—a level far above even the dotcom and housing bubble peaks. It is no wonder, therefore, that even a certified Cool-Aid drinker like St Louis Fed head, James Bullard, has now confessed that he fears a “violent” Wall Street sell-off when the Fed finally ends an 80 month streak of ZIRP sometime this fall.
So what are they waiting for? Actually, this morning’s
Wall Street Journal expressed it about as plaintively as it comes. In a word, the monetary politburo is waiting for zero interest rates, massive debt monetization and its wealth effects promises and “puts” to goose the macros:
…click on the above link to read the rest of the article…
