Skip to comments.Rosenberg: Market Volatility Will Double And Stocks Will Collapse
Posted on 12/11/2009 6:30:15 AM PST by blam
Rosenberg: Market Volatility Will Double And Stocks Will Collapse
Dec. 11, 2009, 5:06 AM
| Having been on the wrong side of the market in 2009, Gluskin Sheff's David Rosenberg is doubling down his bearish bet. It's the smartest course of action for him at this point -- so expect market volatility to double in 2010:
Bloomberg: Well be in a year of heightened volatility, Rosenberg, chief economist at Gluskin Sheff & Associates Inc. in Toronto, said in an interview. Well see periods in 2010 where the VIX will be north of 30 in a period of risk aversion as the economy and earnings very likely fail to hold up to expectations. I see more of a 30 to 40 range in the VIX.
Rosenberg, 49, the former chief North American economist at Merrill Lynch & Co., the brokerage bought by Bank of America Corp., says investors are underestimating risks to the global economy. Theres just a general level of complacency in the marketplace right now, he said.
The cost of buying insurance to guard against a possible decline in equity valuations is currently very low. Thats very low because most investors dont believe they need it.
One would imagine that he's loading up on options. By his words, they're dirt cheap right now since they price-in only half the market volatility that will actually occur.
(Excerpt) Read more at businessinsider.com ...
Dec. 11, 2009, 6:32 AM
As the summer was turning into a fall, there was a really brief period when it was super-cool to believe in the V-shaped recovery.
There were all kinds of op-eds written about this bravely optimistic idea. But something happened. The data from October and November has not been particularly strong. The V-shaped recovery is beginning to look more U-shaped or - gasp - W-shaped.
Dec. 11, 2009, 5:31 AM
This chart shows nine-month returns for the S&P 500 from Bespoke Investment Group. It makes it pretty clear that we've just experienced the most spectacular periods for stocks since... yes... 1933.
Whether an idiot-maker, or idiot-made, equity holders made a ton of money, proving that, once again, when everyone is ultra-bearish, it's time to buy. Even if the world is full of massive uncertainty.
Bespoke: Also, the 9-month 62% gain was preceded by a 9-month decline of 51%. The only time that the index fell more over a 9-month period was in 1931/32 when it dropped 68%. It's easy to forget how crazy things were over the last 18 months, but stats like these provide a staggering refresher.
Yet at the same time, it's highly improbable that the next nine-months will be able to beat what we just experienced. Thus this chart provides fuel for today's bears as well -- it's obvious that after any huge run, there comes an inevitable correction.
The Pragmatic Capitalist
Dec. 11, 2009, 4:53 AM
(This guest post originally appeared at the author's blog)
JP Morgan continues to like the risk trade.
They see the economic recovery continuing into 2010 and forecast that many of the trends that have driven equity markets higher in 2009 will continue into 2010. They see a very strong outlook for corporate earnings and margin growth as the primary driver of equity prices. In fact, they see profit margins expanding to their recent record highs:
Equity markets should rise again next year driven by strong earnings growth. Our $80 S&P 500 EPS forecast for 2010 is 27% higher than this years $63, implying a much faster rise in earnings than nominal GDP, i.e., an expansion in profit margins. Our forecast suggests that by the end of next year, US profit margins are likely to approach the historic highs reached earlier this decade.
The primary beneficiaries of this continued growth in the risk trade will be emerging markets. JP Morgan is the most bullish bank Ive seen on the street so far this year and forecast a very bold 30% increase in emerging market share prices in 2010:
EM equities should continue to outperform next year due to stronger growth and inflows. Our 2010 year-end forecast for MSCI EM is 1,300, an upside of 30% from current levels versus an expected 15% return for developed market equities.
JP Morgan now says the world economy is reaching cruising speed and should grow at a healthy 3.5% clip in 2010. Credit markets should remain healthy and fixed income markets will slowly experience an upward drift in yield. This will keep trends in the forex market largely intact. All in all, look for a lot more of the same in 2010
What happens when all of the free money the FED is loaning
banks to puff up the market drys up?
The music stops and the game of musical chairs ends.
The last ones left in loose.
Real unemployment is growing, real income for the governments
is falling. To get those treasury instruments to move the rates will have to go up or the FED will have to monetize them
“Credit markets should remain healthy”
And just what credit markets are these?
I notice you consistently post “the sky is falling” stuff in regards to the market. I’m no expert, but I do pay attention. I would agree that the market rally in the past few months is puzzling. But it is there.
I guess if you say the market is going to crash, long enough, and loud enough, sooner or later you’ll be right.
Not to jump off topic, but, NICE GAME for your boys last night.
The market will collapse as soon as interest rates start to skyrocket.
“Stop whining, you sound like a LIBERAL P——.”
Wow, on top of being a sky is falling zealot, you’re a real, live internet keyboard commando. Sitting there in mom’s basement, typing tough, mixing it up with posters you don’t agree with.
Should I tremble at your tough typing?
You’ve shown a glimpse into the kind of character, or lack thereof, that posts sky is falling day after day. Forewarned is forarmed.
You must not read the news...many believe the economy is collapsing and that's everywhere in the news daily.
Yes, I'm very pessimistic and I believe rightfully so. You're welcome to your views but you seem to think it's okay to attack mine...when you attack, you'll receive return fire.
I've posted over 10,000 articles to FR and it's only been the last three months or so that I've begun to post about the economy, business and world finances. That's because I think something that's hasn't happened in our life times is happening. Zealot, I don't think so.
I retired at age 50, 15 years ago from my chip-making career and don't ask anything from you or the government.
And, my mother(bless her soul) died almost five years ago at the age of 87.
BTW, the easy solution for you is not to read or even click onto these articles.
Your attempt to censor me is wrong. Calling me names is wrong. Go away.
By Melinda Peer
12/11/09 - 11:55 AM EST
NEW YORK (TheStreet) -- Stocks turned mixed Friday, as investors weighed a strengthening U.S. dollar against fresh data suggesting that U.S. consumers are holding up better than anticipated.
More on BAC Dollar PlaysFive Bold 2010 Predictions for Financial StocksThey Just Don't Get Goldman! Market Activity Dow Jones Industrial Average| ^DJI UPS&P 500 Index| ^GSPC UPBank of America Corporation| BAC UPThe Dow Jones Industrial Average recently was up by 26.8 points, or 0.3%, to 10,432. The S&P 500 rose by 0.5 of a point, or 0.04%, to 1102.8 and the Nasdaq slipped 7.8 points, or 0.8%, to 2183.1.
The dollar index was last up by 0.9%, pressuring commodity prices. Gold for February delivery was trading lower by $6.20 at $1,120 an ounce and the January crude contract was down by 46 cents to $70.08 a barrel.
Earlier, the International Energy Agency said global oil demand would hit 86.3 million barrels a day in 2010, rising at a slightly faster pace than previously forecast on improved economic activity across Asia and the Middle East.
The DJIA is up 44.5 points as I post. See here.
I appreciate your posts, Blam. I agree that we are in an economic mess from he!!, and that the fat lady has yet to sing.
Hope the turkeys out there don’t discourage you.
“Your attempt to censor me is wrong. Calling me names is wrong. Go away.”
I didn’t censor you, a moderator did, based on rules you agreed to when you joined this forum. This is a public forum, if all you can handle is synchophantic agreement, (much like Obama), perhaps it is you who may need to modify your posting habits?
As for your online resume, and personal situation: Meh!
So does this guy...
He's implying a real long slog...
What do you see that would give you such an optimistic outlook?
“What do you see that would give you such an optimistic outlook?”
I guess noting that a poster is all gloom and doom all the time makes me optimistic? Actually, I’m quite pessimistic. I don’t have a clue why the market is up, and I would like to understand better why it’s happening. All gloom and doom all the time doesn’t explain what’s happening now. From what I know of things, there’s no way the market should be up, but it is.
I go by empirical evidence. The market isn’t so bad.
Going with all gloom and doom all the time is like being a weatherman in Hawaii calling for heavy rain all day long, every day. Sooner or later that weatherman will be right, but it’s hardly helpful.
A video with John Mauldin: We’re Still Heading For A Double-Dip Recession (due to tax increases in 2011) http://www.businessinsider.com/business-news/dec-04-mauldin1-2009-12