As America and other developed nations struggle to recover from the financial crisis, the ongoing challenge now starts to claim casualties in multiple asset classes around the world.
Let's take a look at the dominos which have recently fallen and those that could be next in line:
It was the fourth straight record close for the S&P 500. Both the Dow and the S&P 500 hit intraday record highs as well.
US equity valuations are currently not symptomatic of a stock market bubble. However, with frenetically rising stock prices in the face of simultaneously deteriorating macro and micro fundamentals, two questions are begged: First, what is driving the rise in stock prices represented in broad indices such as the S&P 500, Dow Jones Industrial Average and Nasdaq? It is clearly not the recent evolution of fundamentals in the form of macroeconomic and corporate earnings forecasts. Second, how sustainable is the current rally and how far can it go?
With this week’s developments and the stock over $200, “in one sense I can say this is behind us,” Mr. Hastings said. “But it’s like a partially healed bone. It’s still quite fragile. Were we to make a similar mistake, we’d be right back in the penalty box. So we’re not really out of the woods. We’re growing and we’re making good progress, but we’re still not fully back to where we were.”
This is a pretty wide margin, and it made us think of this recent NFIB survey that showed that taxes and government red tape are the biggest problems facing small businesses today. Large caps are obviously more equipped to handle government requirements and red tape. Is this large-cap outperformance the new norm in the current economic environment?
Technical Intermarket Analysis Of Commodities, Bonds And Stocks Raises Bear Market Target For Stocks
Two giant markets, commodities and bonds, are in close agreement about the declining trend of nominal GDP growth. This is at variance with the message being sent from the U.S. stock market, which remains bullishly-configured and which benefits from fast nominal GDP growth.