NEW YORK, Oct. 22 (UPI) -- U.S. stocks rose Tuesday after a disappointing employment situation report
was viewed as cause for the Federal Reserve to keep its easy money policies intact.
The Fed has been the focus of investor strategies since June -- more so, that is, than normal -- when the central bank's Chairman Ben Bernanke suggested it was time to consider pulling back on the bank's $85 billion asset purchasing program.
Since then, negative economic reports have been greeted with a flurry of optimism on Wall Street, as a slow recovery was viewed as a reason for the Fed to maintain its accommodating policies.
The Labor Department said Tuesday that 148,000 jobs were added to the economy in September, fewer than the 181,000 per month average of the past eight months.
On Tuesday, the Dow Jones industrial average added 75.46 points, or 0.49 percent, to 15,467.46. The Standard & Poor's 500 index closed at a record 1,754.67 on a gain of 10.01 points, or 0.57 percent. The Nasdaq composite index of tech-dominated stocks added 9.52 points, or 0.24 percent, to 3,929.57.
In Asia, the Nikkei 225 index in Tokyo added 0.13 percent to reach 14,713.25. The Hang Seng index in Hong Kong shed 0.52 percent to 23,315.99. The Shanghai composite index in China lost 0.83 percent to 2,210.65.
Increasing demand for junk bond market could be signal of the fateful finale of the bull market. What is your view?
The Junk Bond Market Is Telling You To Sell Stocks
Oct 22 2013, 14:37 With the S&P (SPY) hitting new highs every day, the junk bond market is quietly shouting out warning signals that the stock market's days of high returns may be behind us.
Record low treasury yields have been a driving force behind the rally in equities, and have pushed many income investors into lower quality bonds, causing junk bond yields to recently hit an all time record low. The correlation between high yield bonds and equity returns should make a conservative investor cautious, and makes a strong case for taking some risk off the table and reducing your equity exposure.
The market for junk bonds and stocks exhibit many of the same characteristics:
· higher risk related to other asset classes
· historically higher returns
· significant cyclicality in earnings/defaults
· large cyclical price fluctuations
It is also worth looking at junk bond yields as a potential predictor of future stock returns,
==> as Recessionary periods are marked by significantly Higher JUNK bond Yields and Higher EQUITY returns, ===> and non-recessionary periods have Lower junk yields and lower returns.
If you listen carefully, you can hear many reasons why stocks should continue to rise
- the VIX isn't low enough yet, - the Fed can't taper until March because the economy isn't good enough (still an odd reason to buy stocks, though no longer surprising), performance-chasing, the lack of retail participation, the increase in retail participation, the desire to mark a new high, the number of shopping days until Christmas.
I haven't heard anyone mention earnings except insofar as they are beating estimates, and we all know what a manufactured surprise that is. The fourth-quarter earnings growth that was projected to be about 17% back in January, then 10% at the end of the third quarter, is coming in at about at about 4.5% versus estimates of just under 2%. Weak earnings growth is not a sound foundation for 25% annual stock market gains, not 56 months into a bull market. The question is when a pullback of that magnitude might occur, and I don't yet see one as imminent this year. I still say a pre-Thanksgiving fade is more likely than not, especially with AAII readings so high, but it will need some external event to push prices down much past a four or five percent decline. In the meantime, an EU rate cut or Goldilocks-style jobs report could push us higher first. The former isn't very likely, but the latter has a good shot at happening. Longer term you don't want to know the size of the hole we're digging for ourselves, but I do think that notwithstanding the usual geopolitical caveats, a new high is quite possible before the end of the year. The chances for that will depend on how much of a fade we get over the next few weeks. The market is half of the way up a blow-off top, and should that come to pass some serious big ugly is going to soon follow. But why worry about it now? First comes the blow-off - maybe - and as for the rest, well, that's next year's problem. seekingalpha.com/article/1815192-beware-the-complacency-of-the-crowd?source=email_macro_view&ifp=0
Oct 20, 2013 13:00:42 GMT 8 oldman said:
I think it is closer 11am now.There is a lot of optimism in the markets and yet, we all know that the US dollar is going to take a severe beating one of these days and this will shake the foundation of the finance world.
It is scary times but yet we know that governments will try to sustain the party as long as possible.
The world's billionaires are enterprising souls. Self-made billionaires make up 60 per cent of the total population and a fifth have inherited their wealth.
The rest have part-inherited, part-made their own fortunes. ==> All four of the world's "mega-billionaires", who each have a fortune of US$50 billion and above, are self-made. These are Bill Gates, Carlos Slim, Amancio Ortega and Warren Buffet.