After the inflation in P/E multiples has sent the S&P500 to to a level above the 90% percentile of all historical valuations, Goldman has called a time out, and says that there will be no more multiple expansion. As a result only one thing will push stock prices higher "as equity valuations compress as interest rates rise" - higher profits.
While CNBC and the financial media continue to rave about stocks being near their all-time highs, beneath the surface of the market we are seeing signs of big trouble.
Consider the following…
As Michael Batnick noted last week, the S&P 500 as a whole is just 1.6% off its all time highs, but the average stock is down 9.6% from its 52-week high.
Put another way, while the overall index is being held up by a few names, a significant number of companies are already in full blown corrections.
Authored by Lance Roberts via RealInvestmentAdvice.com,
Last week I reviewed Why This Market Reminds Me Of 1999:
“While there is much hope the new President, and his newly minted cabinet, will “Make America Great Again,” there can be a huge difference between expectations and reality. And, like in 1999, there is just the simple realization that eventually excesses will mean revert.
Authored by Bonner & Partners' Bill Bonner via Acting-Man.com,
A Truly Sucky Century
BALTIMORE – What an awful century! Worst we’ve ever seen. Household incomes are down. Employment is down, with 7 million people in the U.S. of working age without jobs. Productivity growth is down. GDP growth is down – to only about 0.5% per capita last year. Even life expectancies are down. Drug overdoses are up. Suicides are up. One out of every eight children lives in a family getting food stamps. One of out every eight adults takes psychoactive drugs .
Authored by Lance Roberts via RealInvestmentAdvice.com,
Next week the Janet Yellen and her minions are expected, with 100% certainty, to lift the Fed funds rate by another 0.25% to 1.00%.