Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Stock Market Dow Elliott Wave Analysis Forecast - 13th Oct 19
The Most Successful IPOs Have This One Thing in Common - 13th Oct 19
Precious Metals & Stock Market VIX Are Set To Launch Dramatically Higher - 13th Oct 19
Discovery Sport EGR Valve Gasket Problems - Land Rover Dealer Fix - 13th Oct 19
Stock Market US Presidential Cycle - Video - 12th Oct 19
Social Security Is Screwing Millennials - 12th Oct 19
Gold Gifts Traders With Another Rotation Below $1500 - 12th Oct 19
US Dollar Index Trend Analysis - 11th Oct 19
China Golden Week Sales Exceed Expectations - 11th Oct 19
Stock Market Short-term Consolidation Does Not change Secular Bullish Trend - 11th Oct 19
The Allure of Upswings in Silver Mining Stocks - 11th Oct 19
US Housing Market 2018-2019 and 2006-2007: Similarities & Differences - 11th Oct 19
Now Is the Time to Load Up on 5G Stocks - 11th Oct 19
Why the Law Can’t Protect Your Money - 11th Oct 19
Will Miami be the First U.S. Real Estate Bubble to Burst? - 11th Oct 19
How Online Casinos Maximise Profits - 11th Oct 19
3 Tips for Picking Junior Gold Stocks - 10th Oct 19
How Does Inflation Affect Exchange Rates? - 10th Oct 19
This Is the Best Time to Load Up on These 3 Value Stocks - 10th Oct 19
What Makes this Gold Market Rally Different From All Others - 10th Oct 19
Stock Market US Presidential Cycle - 9th Oct 19
The IPO Market Is Nowhere Near a Bubble - 9th Oct 19
US Stock Markets Trade Sideways – Waiting on News/Guidance  - 9th Oct 19
Amazon Selling Fake Hard Drives - 4tb WD Blue - How to Check Your Drive is Genuine  - 9th Oct 19
Whatever Happened to Philippines Debt Slavery?  - 9th Oct 19
Gold in the Negative Real Interest Rates Environment - 9th Oct 19
The Later United States Empire - 9th Oct 19
Gold It’s All About Real Interest Rates Not the US Dollar - 8th Oct 19
A Trump Impeachment Would Cause The Stock Market To Rally - 8th Oct 19
The Benefits of Applying for Online Loans - 8th Oct 19
Is There Life Left In Cannabis - 8th Oct 19
Yield Curve Inversion Current State - 7th Oct 19
Silver Is Cheap – And Getting Cheaper - 7th Oct 19
Stock Market Back to Neutral - 7th Oct 19
Free Market Capitalism: Laughably Predictable - 7th Oct 19
Four Fundamental Reasons to Buy Gold and Silver - 7th Oct 19
Gold and Silver Taking a Breather - 7th Oct 19
Check Engine Warning Light ECU Dealer Diagnostic Cost - Land Rover Discovery Sport - 6th Oct 19
Natural Gas Reloads For Another Price Rally - 6th Oct 19
Understanding and Purchasing different types of Plastic Building Materials Online - 6th Oct 19
Craig Hemke: Ignore the Elliott Wave “Buffoons” Calling for a Gold Crash - 6th Oct 19
Stock Market 6 Month Trend Forecast Conclusion - Video - 6th Oct 19
The True Causes Behind the Yield Curve Inversion and Gold - 5th Oct 19
Strategies on how to be a Successful CFD Trader - 5th Oct 19
Gold Stocks Correction Underway - 5th Oct 19
Climate Change When the Levee Breaks - 5th Oct 19
Federal Reserve Bank ‘Guarantees’ Dow Will Not Sink Below 26k - 5th Oct 19
The Russell and Transportation Tell A Completely Different Stock Market Story - 4th Oct 19
Confidence Drives the Economy and Trump’s Trade War Is Killing It - 4th Oct 19
ADL Predicts Crude Oil Prices Will Fall Below $40 - 4th Oct 19
Investing Money? Why You Need a Reputable Accountant - 4th Oct 19
Stumbling Manufacturing and Rising Gold – Now or Later? - 4th Oct 19
Silver Eyes Fourth Quarter Rebound - 4th Oct 19
Gold Price Forecast to Exceed $10,000/Ounce - 3rd Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

Stock Market Investors Confident Despite Global Recession Threat

Stock-Markets / Stock Markets 2012 Oct 13, 2012 - 06:24 AM GMT

By: Sy_Harding

Stock-Markets Best Financial Markets Analysis ArticleIt’s been a most unusual - some say crazy - year for global stock markets, certainly including that of the U.S.

The global economic recovery from the 2007-2009 financial collapse stalled last year and continues to worsen this year, with the International Monetary Fund cutting its forecasts for global economic recovery yet again, including for the U.S., and warning four days ago that risks of the world dropping back into a global recession “are alarmingly high”, and that “no significant improvements appear in the offing.”


That certainly sounds like the IMF doesn’t have much confidence that the ‘Troika’ (the IMF, EU, and ECB) will be successful with the euro-zone rescue plans and stimulus measures announced a month ago.

Meanwhile the stock markets of China and Japan, the world’s second and third largest economies, are in serious bear markets due to their economic slowdowns and fears of the worsening global economic conditions. China’s stock market is down 40% from its peak in 2009. Japan’s market is down 22% from its 2010 peak and still 51% beneath its peak in 2007.

Clearly neither of those extremely important global economies have any more confidence than the IMF that improvements are in the offing.

U.S. corporations seem to be preparing for the possibility of unusually difficult times ahead. They have salted away a record $1.4 trillion in cash, refusing to invest it in their futures, earning near zero on it, the purpose for hoarding the cash rather than using it apparently being to make sure they can pay their bills and survive anything that might lie ahead.

The fear of corporate managements could also be seen in the way that corporate insiders did not agree with the optimism that created the big stock market rally off the June low. They sold into its strength at an unusually heavy pace. According to the latest Vickers Weekly Insider Report, their selling has continued even after the Fed announced its QE3 stimulus measures. Like the IMF, and China and Japan’s markets, they apparently have little confidence that the new rescue efforts by the ECB in Europe and the U.S. Fed, will produce economic improvement anytime soon.

Usually savvy hedge-fund managers likewise did not participate in the June rally, instead selling into it. According to the Wall Street Journal, that has them experiencing their worst year since 1997. The opinion of hedge fund Comstock Partners, revealed in a report this week, is that the economy and stock market face “severe headwinds in the period ahead”. It cites “the ongoing European sovereign debt crisis, significant slowing of growth in China and emerging markets, ongoing problems in Japan, an anemic U.S. recovery, dysfunction in Washington, the coming fiscal cliff, and the first decline in S&P 500 earnings in three years.” Its conclusion is that “while these problems are fairly well-known, they have not been factored into the market since investors have been focusing on other factors they regard as highly bullish.” They cite those factors as mainly being investor confidence that the Fed has their backs and “will prevent anything terrible from happening.”

Private-equity funds are having a similar under-performing year, up on average of only 4%. As the Journal says, that is not what their investors planned on. The funds were also suspicious of the rally, and are sitting on close to $1trillion in cash.

However, U.S. investors remain bullish and confident as evidenced by the resilience in the U.S. stock market. For instance, while China’s stock market is in a bear market and at a 4-year low, the S&P 500 reached a four-year high in mid-September, and has settled back less than 3% since.

That’s quite a contrast to the worsening worries of the IMF, China and Japan, U.S. corporations, company insiders, professional hedge fund and other institutional managers.

But it’s not just U.S. investors that are confident and bullish, but U.S. consumers as well.

The University of Michigan – Thomson Reuters Consumer Sentiment Index was released Friday. It shows that consumer confidence has jumped to 83.1 in October from 78.3 in September. That’s much better than forecasts that it would decline to 78.0.

And at 83.1, consumer confidence is getting close to the 87 level it averaged in the year prior to the 2008-2009 recession. That’s a lot more recovery than global economies have achieved, including that of the U.S.

Is it just due to the pixie dust being puffed out by Wall Street and the Fed, about to be blown away by the gathering storm others see coming.

Or has Main Street got it right this time, while the so-called ‘smart money’ is refusing to inhale the magic?

We are likely to soon know the answer.

Sy Harding is president of Asset Management Research Corp., and editor of the free market blog Street Smart Post.

© 2012 Copyright Sy Harding- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules