Stocks on a roll; Chinese takeover blocked; Coca-Cola earnings

"The S&P 500 has been up more than 1% in four of the last five trading days. This is a feat that has not occurred since October 2011," noted Mike O'Rourke, chief market strategist at JonesTrading.

2. It ain't happening: A Chinese takeover of the Chicago Stock Exchange has been blocked by the U.S. Securities and Exchange Commission.

The deal was first announced in February 2016, and had been in regulatory limbo for two years.

The SEC said it was unable to obtain all the information it needed from the Chinese-led group of investors, including details about how some of the entities involved in the deal were funded. The regulator said this "raises significant doubts" that it would be able to monitor the exchange if the deal went through. monitor the exchange if the deal went through.

Interest rates will be up; inflation will be up; earnings will be hit by rising costs; and then maybe some sanity will provide another correction before an absolute bubble rises further - as fundmentals of lower earnings edge out hopes in “expectations”.

The “correction” - if at held - would have been the best thing for the stock market long term, within an improving an economy, representing a stock market that was not getting ahead of itself.

What makes you thinks the Stock Market needs a correction? That is BS talking points. Maybe the Stock Market is still undervalue.

Why raise interest rates when inflation is around 2%? In 2011 when inflation was well over 3% they lower the interest rates below 3%. The market goes up and it goes down because of many factors involve. One thing for sure hurts the market are the talking points of those who wants to game the market constantly screaming that the market needs a correction.

“What makes you thinks the Stock Market needs a correction? That is BS talking points. Maybe the Stock Market is still undervalue.”

History overwhelmingly suggests it is overvalued.

A price/earnings ratio is a measure of the price of a stock against its annual earnings. It suggests that price as a fraction or a multiple of those earnings. The higher the P/E the higher the stock price is relative to earnings, compared to a lower P/E. Each company can be looked at as to its P/E. And averages for the P/E for entire markets or market indexes can be constructed. That’s what the Schiller P/E calculations have done, and it has the figures from market history for comparison. It is data, not “instinct” or “expectations”. I trust the data because the history of it shows we should.

The Schiller P/E is currently at a level just above Black Tuesday of 1929, and shooting for the level just before the dot.com/high-tech bust.

http://www.multpl.com/shiller-pe/

Can’t compare 1930 economy with 2018 economy and market. Graphs are useful indicators for historical trend to try and predict the market but as it is shown, it had never really follow the exact model. It is like climate change. Using computer models with pass event to try and predict future climates. There are many factors that influence the market than just P/E.

The stock market is worth over 30 Trillion now.

The P/E analysis does not need to concern itself with the SIZE of the stock market; that aspect is irrelevant. The P/E is about the price of any stock vs the annual earnings. The total average P/E is an average for the market, or a market segment. There will be companies which on their own circumstances can, maybe, justify a higher P/E than some other countries. That individual P/E does not matter, as far as looking at the whole market, than the average for the market.

It is not about the P/E “influencing” the market. IT IS up to individual investors and/or analysts whether or not an individual company’s P/E, or a markets average P/E is considered in making their decisions.

The history of the average P/E is not a “model” or a “theory”, it is just the data as it is/was.

There are macro economic reasons, no matter the economic period, as to why stock markets have ballooned to a bubble when the average P/E has been a lot higher than the long term average P/E, and why stock markets have still grown/expanded - in recessions or not - when the markets average P/E has been closer to the historical long term average P/E.

Your arguments are just like the arguments before the dot.com and high-tech bubbles burst - “it’s a different economy”, “it’s a different market”.

Why not through out the Constitution, it’s a “different model” and everything is different now?

History knows better. Things often appear more “different” than some other time than they really are, in the most fundamental sense.

How old is the world economic history that understands long term average sustainable interest rates are on average 4%? Hundreds of years; and neither bubbles nor depressions, central banks or fancy financial instruments have altered that. Average - across and economy - possible business earnings as a % have macro-economic limitations as well, regardless of “investor expectations”. That is why they HAVE gone up and down as can be predicted not by “models” but just by the data that shows what the P/E behavior was leading up to big market downfalls.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.