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The market party is over
CNNMoney ^ | 9/18/2012 | Paul R. La Monica

Posted on 09/18/2012 3:30:21 PM PDT by Signalman

The Federal Reserve and European Central Bank are doing everything they can to keep the market rally going. But guess what? It's time to channel Doris Day and Judy Holliday. The party's over.

When you take a step back and look at all the challenges that continue to face stocks, it's astonishing that they have done as well as they have this year.

"Absent accommodative monetary policy, there is no reason to expect the market to be doing this well this year ... especially during the past few weeks," said John Norris, managing director with Oakworth Capital Bank in Birmingham, Ala.

Another earnings warning from shipping titan FedEx (FDX) this morning is not good news. It could be a sign that several companies will have disappointing profits in the third quarter due to the sluggish global economy. According to data from FactSet Research, earnings for companies in the S&P 500 are expected to decrease by 2.6% in the third quarter, from a year earlier.

The good news (for now at least) is that analysts are expecting a profit rebound in the fourth quarter and beyond. Forecasts are for earnings to increase 10% in the fourth quarter from the same period a year ago, and that earnings will be 11% higher in 2013 than in 2012.

What's more, valuations (despite all the major indexes being at multi-year highs) are not completely unreasonable. The S&P 500 is currently trading at 13 times earnings estimates for the next 12 months.

Still, would it qualify as a monumental surprise if these profit projections wind up being too rosy? Analysts are often overly optimistic. And it just seems natural for stocks to take a breather right now when you consider all the macro risks.

(Excerpt) Read more at buzz.money.cnn.com ...


TOPICS: Business/Economy
KEYWORDS: market; party

1 posted on 09/18/2012 3:30:26 PM PDT by Signalman
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To: Signalman

IMHO: Markets have valued in dollar depreciation of QE Infinity to the next administration.


2 posted on 09/18/2012 4:20:16 PM PDT by jdsteel (Give me freedom, not more government.)
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To: Signalman

The markets stopped being rational a long time ago. Bernankes effort to prop up the markets through the election just ensure a big crash sometime in the near future. Protect your principal, that’s all I can say.


3 posted on 09/18/2012 4:24:09 PM PDT by jwalsh07 (.)
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To: jdsteel

I think you’re right about that. The U.S. stock market is basically an inflation hedge for the U.S. dollar. That’s pretty pathetic, isn’t it?


4 posted on 09/18/2012 4:24:26 PM PDT by Alberta's Child ("If you touch my junk, I'm gonna have you arrested.")
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To: Signalman

Running on fumes...


5 posted on 09/18/2012 4:27:28 PM PDT by Viennacon
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To: Alberta's Child
I think you’re right about that. The U.S. stock market is basically an inflation hedge for the U.S. dollar. That’s pretty pathetic, isn’t it?

Pathetic? Yes. Plus, I do not think volatility is dead. So these gains may well be short lived, and we will just have the same range-bound market....maybe just a little higher.

6 posted on 09/18/2012 6:55:01 PM PDT by jdsteel (Give me freedom, not more government.)
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