The vice-president of the European Central Bank (ECB) warned Wednesday that current high valuations in U.S. equities could spark a possible correction in global stock markets.
- Speaking to CNBC, Vitor Constancio said: “Certainly the cyclically adjusted price earnings ratio in the U.S. is well-above historical averages”
- The ECB released Wednesday its biannual Financial Stability Review, in which the central bank points to potential risks to the stability of the euro area
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- There is a 70 percent chance of a US stock market correction, according to research conducted by fund giant Vanguard Group.
- Several forces are contributing to the much higher than typical risk, including narrowing of the bond yield curve and stretched U.S. equity valuations.
- The trade-off between stocks and bonds, or even stocks and cash, doesn’t look as strong as it did earlier in the bull market, following the financial crash.
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Half of the gold coming out of the ground isn’t profitable to mine based on the true extraction costs, he said.
“The one thing this industry does very well is mine gold at a loss,” Bristow told analysts at a breakfast meeting in Toronto on Friday.
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- Investors are too optimistic right now despite cracks developing in the market, according to a Societe Generale report Monday.
- “Yet, a low volatility carry environment with rather extreme positioning is a dangerous combination, which we recently likened to dancing on the rim of a volcano,” the report said.
- If tax cuts are not passed, there could be a recession, warns the report.
- Societe Generale expects the S&P 500 to fall 22.5 percent from its Monday levels to 2,000 by the end of 2019.
- The Swiss National Bank (SNB) has to print a great deal of money and use nonconventional means to hold down the value of their currency.
- The SNB is buying massive quantities of dollars and euros, paid for by printing hundreds of billions in Swiss francs.
- The SNB owns about $80 billion in U.S. stocks today.
- Switzerland’s central bank now owns more publicly-traded shares in Facebook than Mark Zuckerberg, part of a mushrooming stock portfolio that is likely to grow yet further.
- The stock market’s best days are likely behind it as central banks take away the high levels of stimulus they’ve provided, Janus Henderson’s Bill Gross says.
- Gross spoke as the bull market that began in March 2009 has hit a bit of a soft patch lately, with the Dow and S&P 500 both down slightly this month.
- His Janus Henderson Global Unconstrained Bond fund has been a laggard this year, with a total return of 2.4 percent.
- Bank of America Merrill Lynch predicts “capitulation” for the bull market in 2018, with the S&P 500 peaking at 2,863.
- Strategist Michael Hartnett said the firm is prepared to “downgrade risk aggressively” once it sees the triggers in place.
- A shift from passive to active in investor allocations would be one of the signs that the rally is about over.
- Next year will likely bring lower returns and perhaps a “pause” for the stock market, Wharton School finance professor Jeremy Siegel told CNBC.
- “We have one more push and I think it’s connected with the corporate tax reform,” the longtime bull said.
- Next year he sees returns of less than 10 percent.
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Corporate debt is at its highest level relative to U.S. GDP since the financial crisis, and while not a concern, a snap higher in rates or an economic slump could make it a bigger worry.
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If it’s enacted, the GOP tax cut now working its way through Congress will be the start of a decades-long economic policy disaster unlike any other that has occurred in American history.
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As the stock market calmly racks up records and swells 401(k) balances amid a 9-year-old bull run, some skeptics who predicted the crash in 2008 are getting nervous.