As we kickoff trading in the second week of July, look at what just hit March of 2000 levels, which triggered the stock market crash.
CAUTION: At March 2000 Levels
July 15 (King World News) – Peter Boockvar: So the bar for earnings season is a 70% beat rate give or take as it always is. And try to separate what’s a beat due to stock buybacks and what’s at the net income line. As a new batch of tariffs hit mid month, revenue growth is slowing and margins are receding this will be quite an informative 4-5 weeks ahead of us with the stock market at record highs, 18x earnings and the belief the Fed will engineer a soft landing. As for the valuation metric I like to watch, the price to sales ratio as it takes out a lot of earnings shenanigans, that is just shy of the March 2000 level.
Valuations of course don’t matter until they do so this is a meaningless stat for now. That said, valuation all of a sudden mattered in Hong Kong on Friday when Anheuser Busch Inbev couldn’t get the IPO of their Asian unit off the ground because of valuation push backs.
WARNING: S&P Price To Sales Ratio At March 2000 Levels, Prior To Stock Market Collapse
The trajectory of China’s growth rate continues to slow. I say ‘trajectory’ because the absolute number has to be taken with a grain of salt. The figure of 6.2% y/o/y for Q2 was the slowest since data going back at least to 1992 when the data started to get collected. The stabilization story though has gotten traction because of the June data that was also reported. Industrial production, retail sales and fixed asset investment all beat the estimates but knowing what was organic and what was stimulus induced is tough to separate. For example with retail sales, there have been massive discounts in autos as new car emissions rules come into place where older models can’t be sold after some point. After opening down, the Shanghai comp and H shares bounced back after seeing those June numbers. Copper is up almost 1% at a 2 1/2 week high. The German DAX is up slightly after 6 straight days of declines.
We get more Fed speak this week but it’s clear what they are doing at the end of the month. Last week ended with comments from voting member Charlie Evans, a known dove. He said “Inflation expectations seem to me to be anchored a little bit below a level consistent with our 2% objective, and it has been stubborn like that. That tells me our current setting for policy is a little bit on the restrictive side…I need a couple of rate cuts…in order to get the inflation outlook up.” Spoken like a true academic. To him, the US economy is a giant video game that if the Fed hits some buttons here and there, the inflation rate will get to its desired destination. No matter that other inflation stats are at 2% already, no matter the experience of the BoJ and ECB in trying to get a higher inflation rate.
AUDIO NOW RELEASED!
King World News note: There was a short delay in the release of the latest audio interview with the man who helps to oversee more than $200 billion and you can now listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
Greyerz – What Will Happen When Next Panic Begins
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More articles to follow…
In the meantime, other important releases…
Another Bullish Gold Catalyst, Plus The “Light” At The End Of The Tunnel CLICK HERE TO READ
Big Picture Bullish For Gold But Look At What Hedge Funds Are Up To, Plus Chart Of The Week And Many Other Surprises CLICK HERE TO READ
Inflation Hits 11 Year Highs, Plus Other Surprises CLICK HERE TO READ
Silver Preparing To Break Out, Fed & Its Bubbles, Deja Vu Summer Of 2007, Euro vs Dollar, Plus Miners vs Gold CLICK HERE TO READ
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