Markets stocks

Welcome To ‘Blow-Off Top’ 2020

Featuring Google $1 trillion and the best day for Morgan Stanley in years.

Featuring Google $1 trillion and the best day for Morgan Stanley in years.
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4 comments on “Welcome To ‘Blow-Off Top’ 2020

  1. H-Man, the only thing that will run the train off this equity climb will be an “event” which is not flashing on the dashboard. The dashboard is all green, no yellow or orange flashes. Euphoria is gaining by leaps and bounds while waiting for the “event”. As you have noted, the “shorts” are waiting in the wings, cautiously waiting for the “event”. Meanwhile the “longs” own the day until we see that “event’ which is not a burp but rather a full puke.

  2. Which is why most of us should be long equities. You don’t stand in the way of a blow off top. The question is how long?

    If you are normally 70% equity, should you be 80% equity (lean into this) or 60% equity (lean back from this)?. Or just stay your normal 70%?

  3. The “event” could be:

    Effort(s) by foreign govts to embarass trump into the election

    Geopolitical event – Iran, NK, etc

    Bond selloff forcing the Fed to QE

    Earnings disappointing again

    Eco data doesn’t respond – cons pulls back, biz spend stays subdued

    Wage inflation

    Poor jobs report due to biz pulling back

    Talk of monetary policy impotent

    No ability for fiscal policy

    Dem win in Nov

    Some debt issue – car loans, etc

    What can go right?

    Earnings grow more than expected – but do PEs contract?

    More QE with belief it will eventually work

    People believe there is no risk

    No chance of a recession for the next 2 years

    People willing to buy historic margins and near high PEs

    Inflation doesn’t pick up and deflation held at bay

    Trillion $ deficits don’t matter

    Govt chaos remains positive

    Productivity finally picks up

    Lets see earnings estimates are up 6%, PEs near 20 for near all time high margins and 30-40% of the SP500 in secular decline.

    Nothing can go wrong……………….

    Stocks have doubled plus 20% in 12 years with earnings up 60% ex corp tax cut. Rates historic lows.

    Nasdaq has doubled in 19years.

    My best guess is it will take 20-30 years for the SP500 to double from here.

    I think I will trade them around. There will be much better buying opportunities in my mind.

    • Nothin’ but “Blues Skies”…
      Like my rich uncle told me decades ago, “You’ll never go broke taking a profit”.

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