Black Monday

[skid]

Powers of the President of the United States

Hmmm... scary stuff

they didnt talk much about the nuclear launch codes

[skid]

Not sure about this whole "markets will tank when the Fed raises rates" theory. I mean it's not as if anyone will be pursuing those higher rates from a yield perspective, nor should a (very) gradual return to some sort of normality cause that much instability. Sure there'll be jitters but I'm not buying the wholesale crash perspective.

I doubt if that ,in itself would cause a ''crash'' ,maybe a correction due to the end of an era of easy money--but it could provide a starting point ,with other things coming into play. Just the hint of rate rises certainly spooks markets.

[mondograss]

There's little doubt that the US recovery seems fairly fragile, and the markets seem quite wary of anything that might stall it. So yes, the odd correction is likely to be the outcome of Fed rate rises. We're certainly heading into some uncertain territory at the moment.

[BlackPeter]

Not sure about this whole "markets will tank when the Fed raises rates" theory. I mean it's not as if anyone will be pursuing those higher rates from a yield perspective, nor should a (very) gradual return to some sort of normality cause that much instability. Sure there'll be jitters but I'm not buying the wholesale crash perspective.

Agreed. While markets typically get a bit wobbly knees every time the Fed increases interest rates, they are normally 6 months after the rise higher than before - exception is obviously the last rise prior to a trend change. Given that the current series of rate hikes just started (one 25 point hike so far), is it highly unlikely that the second 25 point hike will already turn the trend.

Obviously - lots of other things might convince the markets to crash, but at this stage I don't see the interest rates facilitating this scenario.

Actually quite the opposite ... our markets are currently drowning in cheap money - which is nearly as bad as having not enough. The current situation results in bad economic decision making. Increasing the cost of money from the current low levels can in my view improve the shape of the economy.

[pierre]

Not too many nerves on the NZX so far today - NZX50 up 32 points as I write. There must be increasing confidence that the Donald will be trumped by Hillary.

[Joshuatree]

Yep hopefully a coup de grace for chtrumpf with the FBI finding nothing and closing the Clinton email case again.But more surprises to come maybe for one or the other.

[pierre]

Not too many nerves on the NZX so far today - NZX50 up 32 points as I write. There must be increasing confidence that the Donald will be trumped by Hillary.

Plenty of happy Hillary supporters - or maybe just anti-Donald's. Whatever, one hour later and the market is up 84 points or 1.3%.

[Baa_Baa]

Plenty of happy Hillary supporters - or maybe just anti-Donald's. Whatever, one hour later and the market is up 84 points or 1.3%.

DOW & SP5 futures gapped up at open.

[Hoop]

What people don't realise atm is the major reason for the correction..simply put Wall St is extremely overvalued..
As I said over and over again..all the market needs is a catalyst to bust the Bull Cycle..The catalyst could be as miniscule as airflow from butterfly wings (The Butterfly Effect).
If Trump wins and the Sharemarket tanks, the media will make Trump a major causative issue when in reality Trump was just the "butterfly" in the wrong place at the wrong time.
My assumption is that if Clinton wins, a short term relief rally "may?" occur. However, Wall St's real problem (overvalued) doesn't go away and the overvalued market awaits for another catalyst to present itself..in other words, the Trump worry will immediately be replaced with another worry and there's plenty of worries out there..

A 135yr chart below simply emphasises how overvalued Wall St really is..
PE10 (Shiller) value around 25 is considered an area where most cyclic reversals are likely to occur...only three times in the last 135years did the price go above 25 without an immediate cyclic reversal and all 3 of those times resulted in a very destructive outcomes.


Edit: without earnings growth imagine what a PE10 value of 5 would look like in say 5 years time ..An S&P500 dropping from 2100 to 430..
Impossible you ask..Well, its the same as saying that PE25+ today was impossible...both have previously occurred 3 times in the last 135 years,,,

[sb9]

DOW & SP5 futures gapped up at open.

Hope its not another BREXIT kinda situation happening, with a pump and dump scenario playing out.....