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12-20-2013, 10:35 PM
Detailing some risks to the global eco**my
Today’s commentary
Most eco**mic analysts are in a bullish frame of mind regarding the outlook for 2014. I believe 2014 will be better than 2013. Nevertheless, there are risks to this optimism, both regarding the real eco**my and the valuation of shares. Below are some highlights on where some of the hidden risks lie.*I am relatively bullish on the cyclical data. So that puts me in the consensus. However, some of the analysts I speak to regularly have a much more cautious view and I wanted to write this post to frame where their caution is coming from.
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My conclusion here then is that we should watch the inventory numbers in the US and credit growth in the US and Europe for macro signs that point to weakness. In terms of the market, Edwards’ chart is a good one. Negative to positive guidance ratios this large are alarming and could mean the market stumbles even if the real eco**my does **t fall into recession as Albert thinks. We have been riding a huge wave of multiple expansion, with more than four-fifths of the rise in stocks over the last year coming from multiple expansion while only less than one-fifth has come from actual earnings growth. If the negative to positive guidance metric is a leading indicator of what to expect, it would make the market vulnerable to a long overdue correction.
I will conclude just by **ting that, despite the foregoing, I am still positive on the eco**my, which is supportive of stocks, mildly bearish for bonds.
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Detailing some risks to the global eco**my (http://www.creditwritedowns.com/2013/12/detailing-risks-global-eco**my.html) originally appeared on Credit Writedowns (http://www.creditwritedowns.com)
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Related posts:
Do the US GDP figures point to a bullish outlook in the global eco**my? (http://www.creditwritedowns.com/2013/12/us-gdp-figures-point-bullish-outlook-global-eco**my.html)
The biggest worry in the global eco**my **w is emerging markets, particularly China (http://www.creditwritedowns.com/2013/06/global-worries-emerging-markets-china.html)
More thoughts on the global recovery (http://www.creditwritedowns.com/2013/11/thoughts-global-recovery.html)
Today’s commentary
Most eco**mic analysts are in a bullish frame of mind regarding the outlook for 2014. I believe 2014 will be better than 2013. Nevertheless, there are risks to this optimism, both regarding the real eco**my and the valuation of shares. Below are some highlights on where some of the hidden risks lie.*I am relatively bullish on the cyclical data. So that puts me in the consensus. However, some of the analysts I speak to regularly have a much more cautious view and I wanted to write this post to frame where their caution is coming from.
[Content protected for Gold members only]
My conclusion here then is that we should watch the inventory numbers in the US and credit growth in the US and Europe for macro signs that point to weakness. In terms of the market, Edwards’ chart is a good one. Negative to positive guidance ratios this large are alarming and could mean the market stumbles even if the real eco**my does **t fall into recession as Albert thinks. We have been riding a huge wave of multiple expansion, with more than four-fifths of the rise in stocks over the last year coming from multiple expansion while only less than one-fifth has come from actual earnings growth. If the negative to positive guidance metric is a leading indicator of what to expect, it would make the market vulnerable to a long overdue correction.
I will conclude just by **ting that, despite the foregoing, I am still positive on the eco**my, which is supportive of stocks, mildly bearish for bonds.
More About: Commentary (http://www.creditwritedowns.com/category/commentary/), credit (http://www.creditwritedowns.com/tag/credit/), Eco**my (http://www.creditwritedowns.com/tag/eco**my/), investing (http://www.creditwritedowns.com/tag/investing/), multiple expansion (http://www.creditwritedowns.com/tag/multiple-expansion/), retail sales (http://www.creditwritedowns.com/tag/retail-sales/), weekly (http://www.creditwritedowns.com/tag/weekly-2/)
The most in-depth research and analysis is on Credit Writedowns Pro (https://www.creditwritedowns.com/members/).
Detailing some risks to the global eco**my (http://www.creditwritedowns.com/2013/12/detailing-risks-global-eco**my.html) originally appeared on Credit Writedowns (http://www.creditwritedowns.com)
Links: RSS (https://www.creditwritedowns.com/feed) - Daily (http://eepurl.com/hfF3U) - Weekly (http://eepurl.com/eklTA) - Twitter (http://twitter.com/edwardnh) - Facebook (http://www.facebook.com/creditwritedowns) - Contact (https://www.creditwritedowns.com/contact)
Credit Writedowns Feed # abf0d081857b85fe6be494728740a4f1
Related posts:
Do the US GDP figures point to a bullish outlook in the global eco**my? (http://www.creditwritedowns.com/2013/12/us-gdp-figures-point-bullish-outlook-global-eco**my.html)
The biggest worry in the global eco**my **w is emerging markets, particularly China (http://www.creditwritedowns.com/2013/06/global-worries-emerging-markets-china.html)
More thoughts on the global recovery (http://www.creditwritedowns.com/2013/11/thoughts-global-recovery.html)