"Carnage awaits" investors, if this chart is anything to go by

admin October 28, 2019

10 3 minutes read

"Carnage awaits" investors, if this chart is anything to go by

Doom-and-gloom crews have been drawing lines between the dot-com bubble and the current market climate for some time now. When stocks regularly hit record highs, those who predict a collapse can't get a break.

But hey, it's almost Halloween – maybe it's their time to shine.

In that spirit, Bear Albert Edwards, global strategist at Société Générale, notes our chart of the day with this graph showing how revenues have deviated from the S&P 500

SPX, + 0.41%

to an extent not seen since, yes, 2000.

What does this mean? "Carnage is waiting," Edwards wrote in a note to clients over the weekend. He warned that emerging technology stocks have disconnected from the reality of earnings at a problematic time.

"The widespread decline in profits will expose" growth "drivers and they will collapse, as they are on incorrect" growth "evaluations [price-to-earnings] with incorrect forecasts from [earnings per share] he said." Just as in 2001, Do not wait for investors to separate real "growth" stocks from the fraudsters. Investors will slam the entire sector and find out later. "

There is no" carnage "yet as investors seem to be in the buying mood.

Market

Futures on the Dow

YM00, + 0.36% ,

S&P

ES00, + 0.30%

and Nasdaq

NQ00, + 0.39%

were all higher. European shares

SXXP, + 0.06%

struggling while Asian stocks

ADOW, + 0.25%

was bolstered by comments on Friday that the US and China were close to reaching a "phase one" trade agreement.

Bitcoin

BTCUSD, -2.55%

exploded over the weekend and broke through the 10,000 level before retiring, trading at just over $ 9,400 on Monday morning.

The buzz

See shares of Tiffany

TIF, + 0.90%

after Paris-based luxury goods company LVMH

MC, + 0.14%

said it is in talks about a potential takeover of the luxury jeweler. AT&T

T, + 0.24%

rose in trading with the premarket as it outlined steps it will take to position activist investor Elliott Management with dividends, buybacks growth, asset sales and debt reduction. Spotify Technology

SPOT, + 1.57%

strengthened as the music service announced that the CFO will retire and user numbers exceed expectations.

President Donald Trump said Sunday that an American military attack in Syria led to the death of Abu Bakr al-Baghdadi, the shadowy leader of the Islamic State group. E.U. granted a three month extension of the UK to Brexit.

It is a state of emergency in California after officials on Sunday ordered nearly 200,000 people to evacuate due to multiple fires. The power company PG&E

PCG, -30.56%

cut power to millions of inhabitants to prevent multiple areas from igniting.

The call

French economist Gabriel Zucman says Senator Elizabeth Wuren's wealth tax, which would impose a tax of at least 2% on households worth more than $ 50 million, would solve economic inequality. "The snowball is getting bigger and bigger," Zucman told Yahoo Finance. "The solution is to lower taxes for the working class, but much higher taxes for the very, very wealthy."

State

3.8%: This is how S&P, on average, has performed during times of decline back to 1945, according to National Bureau of Economic Research data cited by Ritholtz Wealth Management Ben Carlson. Look at this chart and relax:

Quote

“Investors should always consider the stock market as sailors looking at the sea – a means to an end, usually benign but potentially deadly. Catastrophic losses are rare, but their risks never go away. "- Wall Street Journal's Jason Zweig, in a piece about" putting the gospel and the gospel to the extreme test. "

The Economy

October jobs for Friday are the big one to look at, with the ISM production index and Case-Shiller house prices before that. The Federal Open Market Committee is also expected to cut interest rates this week. As of Monday, the Chicago Fed National Activity Index hits at 8pm Eastern Time, followed by the Dallas Fed production survey two hours later.