I will have a go at answer 2) first,
2) Would you have exactly the same posting if you were long US equities? You have not indicated the answer.
I'm not sure how this applies...?
I use the data and overall macro picture first to determine what I should be long/ short, in/ out of, or "biased of".
If growth was accelerating then I would be long equities in which ever sector/s warrants that based on individual sector analysis.
Basically if the above were true for now, I wouldn't be long what I am long now...
If growth is de-accelerating (like we have now) and under the current macro/market conditions then I would be (and am) long what I've stated above.
Not sure if this is what you're getting at...?
Being long Growth, Momentum stocks hasn't been a wise investment of late...
Being long US Treasury Bonds and Gold/ Gold stocks seems to align well with making money and my bear market thesis.
What is the basis for your opinion of markets going higher?
- Do you want to them to go up?
- They should go up?
- I hope that they go up?
- Undervalued/cheap?
- Santa Claus..?
- Trump.....?
I understand that these views may not be yours but they do seem to be that of the consensus "long bias" bulls out there. (Not of the the STT community)
1. a) Consumer spending
Consumer spending probably wasn't the correct word used, as consumers are still going to buy food and basic necessities even if the stock market goes down.
A better gauge on consumer spending by using economic data points would be the 'Retail Sales' data.
As I said previously, the trend is a bit harder to see, nonetheless China and Australia appear to be declining.
The US's stock markets/economy have outlasted all others so their data should reflect stronger numbers.
Retail Sales MoM - US, China & Australia
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Consumer spending is a lagging economic indicator as the general consumer won't start "Tightening the belt" until the recession hits them in the face by means of job and wage cuts.
How many of your friends who aren't involved in the market know what's going on with the economy...?
General consumers are by nature spenders, they will always spend more when they have more cash.
They will always have more cash at the very of a business/market cycle from increases in wage growth.
(Wage growth is seen at the very end of a business/market cycle)
Basically if you want your product made before the other guys, then you're going to have to pay more...
Sadly as profits were more important than wage growth in this cycle, we have mostly seen stagnant wage growth since the GFC.
This is clearly come to a boiling point in France where we have seen nationwide social unrest..
1. b) Corporate profits
I thought I made it clear that we won't see the decline in corporate profits until the next quarterlies are released.
But in saying that and I repeat,
If we look at other publicly available government economic data points, we can see declines in Manufacturing & Production and increases in wage growth, both which impact the bottom line to the downside....
A simple google search will find mannnny articles discussing these 'fears'.
BTW were these company reports that you were reading the same reports that were estimating 20% YoY profits and 4.4% GDP growth...?
Now for your last point and if I understand correctly, you think that GDP won't fall that much and we should still be ok in the 2%+ GDP range.
Just my opinion here,
Obviously I can't give you an exact GDP number forecast but I do indeed have a bearish view that it will be lower than consensus currently expects so I see further downside in the market from here based on the info I've presented above.
I guess what could push it down further than expected would be a multitude of factors that will likely snowball into bigger things.
Add into the mix
- Over leveraged
- No more easy credit/crunch
- Trade tariffs
- Aussie housing crash
- High interest rates (relative to the near on zero that we have been accustomed to.)
What you don't have here is a recipe for higher profits, higher share prices or higher market indexes...
Why do you think that the market has it all wrong, what are you seeing that we don't?
Is this just an opinion or do you have something to backup thoughts?
(20min delay)
