Friday, May 17, 2013
Night): Dow, S&P end at records, stocks mark fourth week of gains
Stocks finish higher for fourth straight week.
The NASDAQ Composite rebounded 33.73
to end at 3,498.97. The Dow popped 121.18
to end at 15,354.40; the S&P 500 vaulted 17.00
to 1,667.47. Oil closed at 95.99: Oil futures settle above $96 on strong data. Gold ended at 1,358::..Gold sinks for seventh session in a row The VIX
slid 0.62 to 12.45
"Stocks continued their climb into uncharted territory on
Friday, racking up the fourth week of gains in a row as encouraging
economic data prompted investors to pick up shares of growth companies.
"The stock market continued its march higher for a
fourth week as investors focused on signs of improvement in the U.S.
S&P at 1,715 at
year-end: J.P. Morgan. "Pull
out the cowbells. These analysts join those who say the bull run isn't
Merrill is no longer a bear -- for this quarter.
Defensive stocks are due for a pullback.
5 wrong ideas about joblessness. "These
misconceptions distract us from actually fixing the unemployment crisi."
Not just stocks but everything is overvalued.
Live blog, video on hearing over IRS scandal.
European stocks rise to highest level since 2008.
Leading economic index up 0.6%
Consumer sentiment highest since 2007.
Treasurys drop as consumer sentiment rises.
Europe stocks on track for weekly gain.
Oil futures flirt with $96 after sentiment jump.
Google seeks to benefit as Gen Y abandons cash.
Bill Gates reclaims 'world's richest' title.
Dear Class of
‘13: You’ve been scammed. "Brett Arends
explains how the College-Industrial Complex drove tuition
to outrageous highs."
Stop 'playing' the stock market. "Investing
isn't child's play no matter how easy it looks these days."
How bond investors can avoid losses. "Burton
Malkiel suggests several alternative strategies using stocks and bonds."
Wild chase for yield continues. "Invetsors
look in remote places as yields on even the riskiest debt fall to record
How college grads can retire rich (after 60 years).
Talk of Fed 'wind down' gets louder.
Google is your market tell. "When
markets go awry, key off a widely held stock that exhibits all symptoms
of a market gone wild."
This market welcomes speculation.
When owner sells, do workers
lose?. "Many entrepreneurs approaching retirement
choose to sell their companies to their employees. For their workers,
are the risks worth the reward?"
Reform may not save Bangladesh.
"Andrew O'Day says western companies are shopping for other
low-wage countries to replace Bangladesh as clothing suppliers."
charts: Clothing costs dive as deficit shrinks.
'Sweet spot' drives stocks higher.
Kirk Spano Reality meets Jim Chanos’s China call.
Jamie Dimon is counting on the little guy to keep him as chairman
Resource plays are a natural bet "Valuations
and sentiment support this contrarian view, writes Neil Gregson."
2008 crash saved retirement for me.
"Dennis Miller says becoming an active investor gave him
more focus and energy."
investing? Read this first.
Who bought Tesla ahead of short
Fidelity and Vanguard are afraid of politics. "Mutual
funds are caught in the middle of one of the most contentious issues in
American politics: Spending by big business to gain influence in
GOP alarmed over political spending plan.
economy: More home building in cards.
Home-builder confidence rises in May.
Das: Less-powerful nations face new order.
6% loss in 6
days: Gold spooked by deflation talk.
Gold futures 'get crushed,' losing $109 over 7 days
The most-shorted stocks are now outperforming the S&P 500.
Students latest victims of deficit obsession.
Top executives' favorite finance apps. "How
financial executives use their smartphones"
Scared by stock-market highs.
"with a large sum to invest, should you be worried about stocks
setting records right now?"
Gold bears going grizzly.
"Brace for another wave of slash-and-burn gold forecasts with
Credit Suisse leading the charge."
How to invest in oil ‘supply shock’.
"The IEA says a “supply shock” will essentially change the
way the oil market works. It also opens up a lot of opportunities for
Saving Social Security by giving it up.
"Wealthier 5% of retirees should sacrifice their benefits to
keep the program solvent."
Are retirees tapping IRAs too
soon?. "Study suggests that savers in their 60s are
making big withdrawals from their nest eggs to pay for basic expenses."
I've moved the Reinhart-Rogoff discussion here.
and the Mars articles here.
of the Markets articles include:
Tesla Is Having A Good Month "To
say Tesla Motors Inc (TSLA) has had a good week would be a massive
understatement. Before its earnings announcement on May 8, TSLA was
already gaining some serious steam throughout April. After closing the
month of March at $37.89, the automaker finished April at $53.28,
+40.61% higher. Then came the earnings announcement. EPS $0.12 vs.
$-0.01. Revenue $562M vs $500.2M. 5,000 new Model S vehicles in Q1,
exceeding guidance of 4,500. 5,000 more Model S vehicles expected in Q2.
More »" .
LEI Perks Up in April.
"After a slight decline in March, the Conference Board's LEI
(Leading Economic Index) perked up in April, with the reading coming in
both above the consensus expectations as well as last month's modest ...
UofM Sentiment Reading Improves in May. .
Analysis: Focusing on the Fed.
real-time updates throughout the trading day, try
State of the Markets Twitterfeed.
At a P/E ratio of 19.3 on the S&P 500 and 16¾ on
the Dow, stocks are near the upper levels of their normal ranges, but
are not yet at quite their normal bull market peaks (20-to-22 on the
S&P 500). They are not in bubble territory at this time (see
Paul Krugman's Too Much Talk About Liquidity).
The following chart, taken from Dr. Krugman's referenced article,
elegantly illustrates this point.
This warrants a few further comments.
The Shiller Cyclically Adjusted PE (CAPE) ratio is
being trotted out to show that the markets are currently overvalued
because the ten-year average for the S&P 500 is 23.7, and the
Shiller CAPE has had a good track record as a predictor of stock market
future performance. But in 1999, the P/E ratio on the S&P 500
reached a level of overvaluation well above its value at any previous
time in its history, and has been gradually falling to its present
level. (Note, though, that the P/E ratio went to infinity (and beyond
(:-)) in March, 2009 when earnings briefly went negative.) So of course
it's abnormally high looking backward. If we had picked a decade when it
had been abnormally low for a while (like 1977-1987) but were rising
again, the Shiller CAPE would have been abnormally low, and would have
led to a false sense of complacency just in time for the Crash of '87. Shiller PE Continues To Mislead Investors, S&P 500 Is Fairly Valued
This is a little like a situation in which you're in
an automobile accident that keeps you from returning to full manual
labor for a year. In another year, after you've been back on the
job for a full year, we could say that statistically, you've only been
able to work half-time for the past two years, and we could therefore
conclude that the probability that you'll be able to work full-time in
the third year is only 50%.
As Mark Twain said, there are three kinds of
prevarications: "lies, damnd lies, and statistics".
It's tempting, with the market indices approaching
their turning points, to scale down our investments, taking part of our
profits off the table. That may be sage counsel. The only cautionary
note would be that a situation like this arose in early 1996, and
especially, later in 1996 when the market indices went way out of
bounds, continuing to rise until 1999. This was during the dot.com
bubble, and led Alan Greenspan to coin the term "irrational
exuberance". It could happen again, although the expected outcome
is a limited further rise, followed by a cyclical retrenchment.
If I weren't following the State-of-the-Markets
advisory guidance (and hoping it works), I'd be scaling back my market
exposure right now (which the State-of-the-Markets advisory service has
In the meantime, (1) we're overdue for a correction,
and (2) the indices are rising parabolically, consistent with a final
Are the bears finally capitulating?
Markets and Super-Bear Markets from 1871 to the Present
this going to do to my retirement? Can I ever make this up?
"recession" is categorically different in cause and
consequences than other recessions.
is the national debt, really?
What Should You
Do About the Fluctuations in the Stock Market?
the economy sinking like a stone, how can anyone seriously claim that a
new bull market is about to start?