The New Bull Market

Of course it's subjective. For example, nobody can know how much business travel is going to be reduced and for how long. Anyone who wants to claim they can estimate that I will laugh at. The only thing that can be said with any certainty is if things will be more or less than they were before and fact is that many, MANY companies are flatly on record as stating that they're NEVER going to return to their previous levels of in-office staff or business travel, and with business travel being as profitable as it is, there goes a massive chunk of airline profits just right there.

All these estimates are based on an assumption that things will (eventually) return to their previous levels and it's just a matter of pricing the time in. I'm saying that's incorrect - they're not going to return to their previous levels and whatever they do get to is certainly not going to come about as quickly as people think either.

I think the market is pricing in waaay too optimistic future earnings etc etc. Let's take a look at GE in isolation over the past 6 months:



There's not even a trend to follow. It's not like AU's travel/aviation stocks that have slowly crept up as coronavirus cases have reduced for example. Instead, it's just an absolute sh!tshow. If anything, there's just been a long slow melt since that peak after the pullback on what looks like the 16th of june:




$6 looks like the support level and it's either busted that or knocked on the door of it 4x in the last 6 months and actually cracked the $5.50 mark at one point. $7 looks like the top too and with dow futures in the red, we're likely looking at another significant drop tonight.

Then there's seasonality to consider. Europe's already looking at increased lockdowns being imposed within a few days and winter's going to make things so, so much worse up there - from both an aviation and a simple economic perspective. There's also the curveball of the 737 max being grounded until god knows when - which is a massive contract that's literally non-existent until they get recertified and the fixes installed in all the existing planes as well which is going to take months at absolute best. With jet engines, like buying a car, the profit is not in the sales margin but rather, the maintenance of the product, which is all negotiated and sold as a combined servicing and engine package with the jet engines (the airlines often get the engines at cost price if GE gets the servicing contracts), meaning that even if boeing keep making the jets and just park them outside everett and have stacks of them in stock, if they aren't flying then there's no maintenance to be done on the engines. No maintenance = no profits for GE.

I wouldn't even think about a buy order at anything more than $6 and if my suspicions about seasonality are correct, we're going to see the $5.50 mark cracked again. Maybe even $5.

Jolly Jay is on show a great deal this week. A super dovish tone may just pump more optimism and inflation into financial assets this week.

https://www.federalreserve.gov/newsevents/calendar.htm

Maybe gold above USD$2000 an ounce this week.

Come on Jay; the market needs to hear the words: "whatever it takes"

Just like Draghi:

Then Ms Lagarde is due to speak soon also.



Dump usually then the pump after the meetings/ briefs/speeches:


We will see.

over9k said:

It's reliant on selling jet engines, and aviation is toast.

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I'll just add that there's also a market for jet engines in other applications.

Power generation primarily with either aero-derivative or industrial gas turbines used for peaking and backup power stations or, in conjunction with a steam turbine, as combined cycle plant (which is considerably more fuel efficient but far less flexible in operation).

GE and RR are both heavily involved as suppliers to this application.

Needless to say though, the market for those will also be taking a hit at the global level due to the economic situation though not likely to the same extent as aviation.

Well that would be energy more broadly, and I posted the ETF for that a few posts ago - that's dropped the most of all over the last month.

The futures looking brutal, a deeper correction taking place or now starting the dot.com of the Nasdaq?
I guess all the fund managers will be running to gold this week , maybe will see gold push through $2k ?
Uncertain times and with tic tock- times differently ticking , sorry bad pun,

Dark1975 said:

The futures looking brutal, a deeper correction taking place or now starting the dot.com of the Nasdaq?
I guess all the fund managers will be running to gold this week , maybe will see gold push through $2k ?
Uncertain times and with tic tock- times differently ticking , sorry bad pun,

Click to expand...

The markets are forcing Powell and Lagarde to capitulate into a perpetual super dovish stance; unlimited QE and asset purchases.

It is going to be an interesting week. I like Mario Draghi's line: "whatever it takes"

We will see how the global markets end the week after Powell and Lagarde finish their briefings/meetings/speeches/announcements.

I think it's RBG's death that's triggered it all.

Industrials have been massacred. GE's down 8% on the day. Zoom has rallied AGAIN.

"Morgan Stanley Turns Bearish, Sees Tech Plunge Accelerating As Investors Dump Most QQQs In 20 Years"

Yep, dow down 1.84%, nasdaq down 0.13% at close. Zoom rallied almost 7%, with GE down 7%.

Not being prickly here duc: You sure about that bull market/rotation you were talking about earlier?


Edit: Amy Coney Barrett being tapped for supreme court.

You guys can stay with tech if you like; looks like momentum is moving out of tech.

I am basically sitting on the sidelines until the election is over anyway.

" Finally, none of this appears to be news to investors, because one week after a massive inflow into tech funds (as discussed last week), this morning Bloomberg notes that investors are dumping the largest tech ETF at the fastest pace in 20 years. Specifically, the $122 billion Invesco QQQ ETF suffered its biggest daily outflow since October 2000, losing almost $3.5 billion on Friday. " (https://www.zerohedge.com/markets/nasdaq-plunge-dead-ahead-investors-dump-most-qqqs-20-years)

ducati916 said:

And in a news story:

View attachment 112083

I guess the drug dealers never got the email.

Unfortunately, this is the sort of dumb stuff bankers do.

jog on
duc

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So this will turn into a total storm in a tea-cup by the time it all works out:



jog on
duc

This is what I was talking about when I said that a legal reopening is not a return to normal.



And this is what I was talking about reference things never returning to the way they were. There's just endless examples of words to this effect from that many companies...

I also think that there's going to come a time when one of the big tech/money makes a play for zoom. It might be oracle's next target, who knows.

This whole RBG hype by some Wall Street analysts is completely overblown:

1. A justice position has become vacant under a Republican administration.

2. It is within the President's powers to nominate the next Justice.

3. The Judiciary Committee is chaired and essentially controlled by the Republicans.

4. The Senate is controlled by the Republicans.

5. The November 3 election is 6 weeks away, more than enough time to appoint a new Justice.

Really it is the 2nd COVID wave and subsequent lockdowns, lack of corporate profits and GDP growth, lack of effective fiscal support, and lack of effective monetary support that I think is more concerning.

over9k said:

View attachment 112098

This is what I was talking about when I said that a legal reopening is not a return to normal.

View attachment 112099

And this is what I was talking about reference things never returning to the way they were. There's just endless examples of words to this effect from that many companies...

I also think that there's going to come a time when one of the big tech/money makes a play for zoom. It might be oracle's next target, who knows.

Click to expand...

Corrections Officers
Police Officers
Firebrigade
Aircrew
Nurses
Doctors
Construction workers
Electricians
Plumbers
Carpenters
Road workers
Drivers
Chefs
Military
Etc, etc, etc.

None of these can work remotely. So while you can find the odd Tech. Co. that can work remotely, the majority of the population cannot.

jog on
duc

ducati916 said:

We are definitely not out of the woods yet!

View attachment 112109View attachment 112110View attachment 112111View attachment 112112

However, on a positive note, the macro-picture remains unchanged. Therefore, a correction, but not a re-visit to the March lows.

jog on
duc

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I think much pivots on Jay's words and actions this week; otherwise the trajectory might be a gradual drift to March lows over the next 6 weeks leading up to the US election.

I am ~56% cash, ~22% equities and ~22% physical precious metals at the moment and won't make any portfolio changes until the election; unless I see a worthy risk to take on a particular stock.

Chronos-Plutus said:

I think much pivots on Jay's words and actions this week; otherwise the trajectory might be a gradual drift to March lows over the next 6 weeks leading up to the US election.

I am crystalizing my portfolio as ~56% cash, ~22% equities and ~22% physical precious metals until the election; unless a I see a worthy risk to take on a particular stock.

Click to expand...

While I avoid saying 'never', I would be pretty surprised if we return to March lows (Indices).

jog on
duc