Social Media - Your money and the internet: Don't rely on social media stock tips, EU watchdog warns retail investors - by Huw Jones

etail investors following the Reddit forum WallStreetBets in the United States piled into GameStop Corp last month, sending shares in the retailer rocketing at the expense of prominent investors who had bet against the stock, ringing alarm bells in Europe.

Although market rules and structures are different in the EU, it cannot be ruled out that similar circumstances may occur in the bloc as well, the European Securities and Markets Authority said in a statement.

Read more at: https://www.reuters.com/article/us-eu-markets-regulator/dont-rely-on-social-media-stock-tips-eu-watchdog-warns-retail-investors-idUSKBN2AH16A

US Economy Poll: Americans Wary That Stock Market Bubble Will Burst

A new Rasmussen Reports national telephone and online survey finds that 61% of American Adults are at least somewhat concerned that the stock market bubble will burst and push the economy back into recession with 23% who are Very Concerned. Twenty-five percent (25%) don't share that fear, but that includes only seven percent (7%) who are Not at All Concerned.

Read more at Americans Wary That Stock Market Bubble Will Burst - Rasmussen Reports®

USA - Wall Street: Greed overtakes fear in the stock market, but don’t be lured into this short-lived rally

In short order, greed in the stock market has mostly taken over from fear after reports of slowing new coronavirus cases in New York and Europe.

Is it prudent to chase the rally? The answer is “no,” without knowing where you belong in the protection band. (More on that later.) The best way to analyze the stock market is through multiple time frames. Let’s examine with the help of two charts.

Please click here for an annotated chart of the Dow Jones Industrial Average ETF DIA, +1.97%, which tracks the Dow Jones Industrial Average DJIA, +1.90%.
 
Please click here for an annotated chart of S&P 500 ETF SPY, +1.65%, which does the same for the S&P 500 Index SPX, +1.68%.

For the complete report click here:
Greed overtakes fear in the stock market, but don’t be lured into this short-lived rally - MarketWatch

Stock market : Data: Rings a Warning – The Stock Market Crash Isn't Over

Google Trends data shows huge interest from retail investors looking to learn how to buy stocks, and that's bad news for the Dow Jones

Read more at:
https://www.ccn.com/google-trends-data-rings-a-warning-the-stock-market-crash-isnt-over/

US Economy - Voodoo Economics: Even though stocks jump on hopes for a coronavirus stimulus package - "reality of positive effect is still very nebulous - by Jessica Menton

U.S. stocks advanced Tuesday on hopes that Congress would pass a stimulus bill to shield the economy from the coronavirus pandemic.

The Dow Jones Industrial Average rallied more than 1,600 points after slumping to a three-year low a day earlier. The Standard & Poor’s 500 jumped 7.5%. Stock futures had briefly surged 5%, triggering an automatic shock absorber.

Stocks stabilized overnight after a turbulent start to the week as Congress was nearing a rescue plan that could inject $2 trillion into the economy. The measure is designed to provide direct payments of $1,200 to most Americans, help small businesses shuttered across the country and aid the hard-hit travel industry.

House Speaker Nancy Pelosi said Tuesday morning a deal on an economic stimulus package may be reached in the "next few hours."

Read more at: Dow: Stocks jump on hopes for a coronavirus stimulus package

USA - Wall Street Selloff? ; Dow Futures Point to Friday Bloodbath as Coronavirus Shock Hits Home

The U.S. futures market traded sharply lower overnight, extending a brutal selloff that has engulfed

Wall Street for the better part of three weeks. Dow Jones mini futures contracts were off by as much as 623 points to reach an intraday low of 20,321.00.

At the time of writing, the Dow Jones futures contract was down 522 points, or 2.5%, to 20,563.00.

Wall Street: ‘Head-fake’ stock market rally may become real with interest-rate cuts - by Nigam Arora

Before getting carried away with any rallies, remember when the stock market started going up on the news of coronavirus. The reasoning of Wall Street was that the virus would cause central banks to print more money. (The stock market is addicted to easy money.) Subsequently, Wall Street twisted the news of the coronavirus to claim that it was easing, and the stock market went higher than it was before the news of coronavirus. At that time, I wrote “How an external event could stunt U.S. stocks.”

All prudent stock market investors should consider reading “Prudent investors should look at these four stock charts as coronavirus spreads” and “Stock market investors’ motto — ‘in central banks we trust’ — is still working.”

Comment EU-Digest: Expect what the Federal Reserve and central banks have done in the past: Save stock market investors

Read more at: Head-fake’ stock market rally may become real with interest-rate cuts - MarketWatch

China - US trade deal: World stocks pause at record peak as markets assess U.S.-China deal

World stocks inched ahead to a record high on Thursday after the United States and China signed an initial deal to defuse their 18-month trade war, though financial markets were wary as a number of thorny issues remained unresolved.

Read more at:
https://uk.reuters.com/article/us-global-markets/world-stocks-pause-at-record-peak-as-markets-assess-u-s-china-deal-idUKKBN1ZF02X

USA: Stocks could see a double-digit drop in the coming months, warns Wells Fargo

Read full report at: 
Stocks could see a double-digit drop in the coming months, warns Wells Fargo - MarketWatch

USA - Economy: Trump perfectly orchestrates the stock market’s rise whenever momentum wanes

Price action, internal momentum and volume aren’t great, but that doesn’t matter when the president wields his baton.

Read more at:

https://www.marketwatch.com/story/trump-perfectly-orchestrates-the-stock-markets-rise-whenever-momentum-wanes-2019-12-05

China-US Trade Talks go sour and stock market tumbles 617 points

Dow tumbles 617 points, TSX down 111 on trade tensions

Ready more at:

https://www.cbc.ca/news/business/may-13-markets-1.5133595

USA - Wall Street: Trump says stock market should be 10.000 points higher

Donald Trump: The stock market should be as much as 10,000 points higher

Read more at:
https://on.mktw.net/2IxU4ML

China-USA Tariffs: Trade war headlines could get much worse before they get better - by Patti Domm

With little apparent progress in U.S.-China trade talks, the Trump administration could be about to open up a new front in the trade wars by taking on the European auto industry — and that could spook markets.

U.S. negotiators head to China next week, and while there are few signs any kind of deal is near, many strategists expect to see some signs that talks will continue and an eventual agreement will be reached, even if a March 1 deadline on new tariffs is pushed back.

But while the market has focused on those talks, another battle is brewing. The Commerce Department by Feb. 17 is expected to release a broad report on auto imports and national security, and experts say a part of that report could recommend tariffs on European autos.

The White House would then have 90 days to respond.

Dan Clifton, head of policy research at Strategas, said Trump could be using the threat of auto tariffs as a way to get the EU to cooperate on other matters. The EU has been resisting efforts to include U.S. agriculture in a trade deal. "Just because there's a report does not mean tariffs will go into effect," he notes.

But some economists expect the administration to move on the auto tariffs, specifically on European cars. For instance, UBS economists said they expect 25 percent tariffs to be placed on finished vehicles, not parts. The administration then could grant exemptions to other countries that have cooperated, like Korea, Canada and Mexico, but the European Union would not be exempted.

"It just seems like if people had been worried about the tariff war with China, this would be another reason for people to worry. In our view, this is not a macro event for the U.S. because the auto industry seems to be pretty tariff savvy and can get around them," said Seth Carpenter, chief U.S. economist at UBS.

Some strategists fear investors are keenly focused on China, and expect a resolution, but could be surprised by ramped-up trade friction with Europe.

"The market would tank," said Peter Boockvar, chief investment officer at Bleakley Advisory Group. "The market has spoken loud and clear that it's had enough of these tariffs. ... The market is fed up with this. Global growth is slowing dramatically because of trade. You want to put another bullet in it's head?"

Read more: Trade war headlines could get much worse before they get better

US Economy: Dow plunges by more than 600 points in massive market sell-off - by Lucy Bayly

The Dow Jones Industrial Average sank by more than 600 points Monday, dragged down by a tumble in Apple and Amazon shares, mounting geopolitical concerns, and a strengthening dollar.

The S&P also stumbled, falling by 2 percent after shares in Goldman Sachs sank by more than 7 percent amid reports that Malaysia is seeking a multimillion-dollar refund from the investment firm for its role in the country’s 1MDB state fund money-laundering scandal.

The tech-heavy Nasdaq composite index was down 2.8 percent.

Apple had pulled down tech stocks early Monday after Lumentum, a key supplier to the Cupertino-based giant, said it was cutting its outlook for the second quarter of 2019 based on lower forecast production volume for one of its major clients.

Tobacco stocks also had a bad day, tumbling double digits on news that the Food and Drug Administration is mulling a ban on menthol cigarettes.
. 

Read More: Dow plunges by more than 600 points in massive market sell-off

US ECONOMY: COULD RECORD US DEFICIT TRIGGER THE NEXT RECESSION: ? "As U.S. trade gap widens to dangerous hights."

The U.S. trade deficit rose to a seven-month high in September as imports surged to a record high amid strong domestic demand, offsetting a rebound in exports.

The Commerce Department said on Friday the trade gap increased 1.3 percent to $54.0 billion, widening for a fourth straight month. Data for August was revised to show the trade deficit rising to $53.3 billion instead of the previously reported $53.2 billion.

Could the US Economy collapse?

But here's the bigger question that retail investors and Wall Street are currently asking: Is the current stock market correction over? Given the many headwinds facing stocks and the U.S. and/or global economy, the answer may not be what investors want to hear.

Here are 25 reasons and/or scenarios that could cause the stock market to head substantially lower than where it's currently valued.

1. The ongoing trade war with China escalates, raising material costs, curbing consumer spending, and hurting corporate profits.
2. Corporate share buybacks fail to boost per-share profits as much as expected.
3. Democrats win one or both houses of Congress, hurting the chance of Republicans to pass further fiscal stimulus legislation.
4. The federal budget deficit continues to soar, placing added emphasis on our growing national debt, currently at more than $21 trillion.
5. The U.S. dollar keeps strengthening, placing pressure on exports and worsening the U.S. trade deficit with foreign countries.
6. FANG stocks – that's Facebook, Amazon.com, Netflix, and Google (now Alphabet) -- continue to draw the ire of short-sellers.
7. The Federal Reserve gets overly aggressive with interest rate hikes, sapping lending demand.
8. The yield curve flattens, reducing the desire of banks to lend money.
9. Interest rates rise, providing incentive for investors to ditch volatile equities for the safety of bonds and bank CDs.
10. Britain falls into a "hard Brexit." With few or no trade deals in place, the U.K. falls into recession, taking the U.S. and other developed countries with it.
11. China's economy experiences its slowest growth in decades, placing pressure on its ability to import from the U.S. and other key players.
12. The U.S. housing market shows signs of weakening, with important markets like California seeing a steep drop-off in new home sales.
13. Credit-card delinquencies begin to trickle higher, demonstrating the inability of consumers to meet their payment obligations.
14. The subprime auto loan market bubble bursts.
15. The U.S. goes to war, regardless of the reason or the country in question.
16. An errant tweet from President Trump stirs Wall Street and investors.
17. A flash crash caused by computer algorithms results in substantially reduced liquidity and perpetuates a rapid move lower in the stock market.
18. Investor emotions (especially those of day traders) get out of hand and send traders running for the exit.
19. The unemployment rate, which is at a 49-year low, begins to rise, signaling peak employment and the possibility of a weakening economy.
20. Disruption in important oil-producing countries causes crude prices to skyrocket or plunge. Either way, it could create sticker shock or job losses and adversely impact the U.S. economy.
21. U.S. GDP data shows slowing growth, which, in turn, cools investor expectations for stocks, sending them lower.
22. Inflation comes in far lower than expected, signaling that businesses have little pricing power. The prospect of deflation could wreak havoc on corporate earnings, causing the market to fall.
23. The U.S. debt ceiling is hit (yet again), but the political divide in Congress becomes too great for lawmakers to overcome, allowing the shutdown to perpetuate for months.
24. European debt crisis 2.0 hits, with countries like Italy unable to dig their way out of years of loose borrowing.
25. A widely followed pundit, such as Warren Buffett, sounds the cry of the stock market being overvalued.

In other words, there is no shortage of reasons the stock market could tumble from its recent all-time highs.

Bottom-line, however -it does not look good for the US Economy as the deficit is coming close to a trillion US dollars.Impossible to pay it back, unless by slashing government spending, and increasing taxes.

Unlike the trillion dollar budget deficits that occurred during the Obama administration that were temporary and largely the result of the Great Recession, the Trump deficits that will soon reach and exceed $1 trillion are permanent and will only get worse in the years ahead.

The Trump deficits are the result of changes in federal spending and revenue that will continue to be in place until some president and Congress decide to reverse them, that is, to increase taxes and make cuts to popular programs.

EU-Digest

USA: Facebook loss of $ 100b in stock market value

Facebook loses $100B in stock market value as quarterly earnings show slowing growth

Read more at:
https://www.cbc.ca/news/business/facebook-stock-plunge-1.4762449 

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USA Economy: Dow Slumps on Trump Trade War Escalation

Stocks on Wall Street closed sharply lower and global stocks tumbled on Wednesday, July 11, following the latest escalation in trade war rhetoric from the White House, which published a list of $200 billion worth of China-made goods it said will be hit with fresh tariffs.

The list, which includes products across sectors such as consumer technology, agriculture and automobile parts and equipment, came just days after Donald Trump unveiled $34 billion in tariffs on Chinese goods that were immediately reciprocated by Beijing.

"For over a year, the Trump administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition," U.S. Trade Representative Robert Lighthizer said in a statement. "Rather than address our legitimate concerns, China has begun to retaliate against U.S. products ... There is no justification for such action."

China's Commerce Ministry said Wednesday that the latest tariff threat was "bad for China, the U.S. and the rest of the world" and promised to retaliate with both "quantitative and qualitative" measures.

Read more: Dow Slumps on Trump Trade War Escalation - TheStreet

The Dow Jones Industrial Average is a totally meaningless figure, just like the Dow itself - here is why !

The first reason why stock market indexes, like the Dow, rise over long periods of time is that the indexe
s are not adjusted for inflation.

Inflation is when overall prices increase. It is a modern occurrence in most major countries. When there’s inflation, everything costs more as time passes, including the price of shares of stock
.
The Dow Jones index is calculated by adding up the non-adjusted stock prices of all 30 members and dividing by something known as the “Dow divisor,” which is continually adjusted to account for stock splits, spin offs and other changes. This divisor ensures historical continuity.

The importance of the long-term inflation in driving stock market indexes higher is seen by understanding the “rule of 70.” This rule shows how long it takes for the average price in the economy to double. For example, if something costs US$10 today, the rule of 70 shows how many years it will take for the price to reach $20. To determine the number of years, divide 70 by the inflation rate stripped of its percentage sign.

Since the turn of the 21st century, US inflation has increased prices by roughly 2.2 percent per year. If prices continue to rise at this rate, then the typical price of most things in the US will double roughly every 32 years (70 divided by 2.2). So if inflation were to persist at this rate, this means about three decades from now the Dow will hit 40,000, even if businesses sell the exact same number of cars, phones, movies, meals and all the other things available in the economy.

The second reason why the Dow inevitably rises over long periods of time is that under performing companies are periodically removed from the index and replaced by companies that are performing better.

Replacing under performing companies that have a falling stock price, with companies that have a rising stock price ensures the index continues to climb over the long term.

Charles Dow, one of the founders of the Wall Street Journal newspaper, started the Dow Jones Industrial Average in May of 1886.  His intention 120 years ago was not to create an index that regularly hit new highs. Instead, the goal was to give readers a single number to give them a quick understanding of how the stocks of the most important companies were faring.

Nevertheless, because the list of companies in the Dow has changed many times to eliminate under performing stocks, it is essentially designed, even if by accident, to climb ever higher.

The Dow for decades has been comprised of 30 stocks. Nevertheless, over its 120 year existence there have been 133 different companies on the list. The editors of the Wall Street Journal choose which companies are in the index and once a year, on average, add a new company to the list and drop an old one.

Since 2010, the Dow has included five new companies; Apple, Goldman Sachs, Nike, United Healthcare and Visa. To keep the list fixed at 30, five companies have been dropped: Alcoa, AT&T, Bank of America, Kraft Foods and Hewlett-Packard.

General Electric, or GE, is the only company that was both on the original 1886 list and included in the index today. Nevertheless, even this major company founded by Thomas Edison has not been on the list continuously. It was dropped in 1901 and then reinstated at the end of 1907.

Many famous companies in America were on the Dow and then were dropped before going bankrupt or drastically shrinking in size. Eastman Kodak was dropped in 2004, while Bethlehem Steel was removed in 1997, both only a few years before going bankrupt. The editors knocked off Sears Roebuck in 1999 and F.W. Woolworth in 1997 as people shifted away from buying items at department stores and five and dimes.

The periodic replacement of companies means the Dow operates like an actively managed mutual fund, in which humans pick companies that are expected to do well in the future. The Dow needs periodic human intervention. Without it, the list would slowly atrophy as companies die off or become less relevant to the overall economy.

In sum, the presence of inflation in the US and the continued efforts of editors at the Wall Street Journal to replace lagging companies in the index with companies that have high-flying prospects and stock prices will always result in headlines every so often that trumpet “turn-of-the-odometer” milestone.

Bottom-line:  Wall Street basically is a system of financial manipulation, some call it "a financial casino", used by smart financial brokers to get immensely rich, while keeping their clients happy, by providing them with returns on their investments, which are far below their own, but usually above the interest rates of Banking Institutions. The brokers themselves basically don't care if the stock market goes up or down, because they will earn money on shares sold or bought by their clients.  

If the stock market starts dropping rapidly, as it is doing now, and you are holding on to a large stock investment and have time to wait (usually several years)  leave it in, but if you are cash dependent or strapped, sell immediately. rather than going bankrupt.

EU-Digest

US: Wall Street Pipe-Dream: Market momentum has never been higher but the risk of a crash is high - by Marcus Padley

I wouldn't want to scare you but have you seen a chart of the Dow Jones or the S&P 500 index recently? The RSI or Relative Strength Index, a technical indicator used by chartists to measure the speed and change of price movements, is at record highs.

In the technical world the RSI goes from zero to 100 and if a stock has an RSI below 30 it is described as "oversold", and if the RSI is over 70, it is described as "overbought"

While individual stocks are quite volatile and can regularly appear as oversold and overbought, an index like the S&P 500 index, which represents the average of 500 stock prices, is, by definition, not volatile and rarely becomes either oversold or overbought.

At the moment the RSI for the S&P 500 index is trading at 87.9. The Dow Jones RSI is currently 90.5. That means they are both overbought, which is rare enough, but more significantly, I can't see that they have ever seen an RSI number this high, even in the tech boom, ahead of the 1987 crash, or before the global financial crisis. The momentum behind the US markets has never been higher than now

On top of that, the S&P 500 price earnings ratio is now at 24.87x; that is the highest since the tech boom and higher than pre-GFC. I own a couple of businesses and I have to tell you, if someone wanted to come and pay me 24.87x post tax earnings for either of them I would retire a gazillionaire. Yet this is the average, repeat, average, valuation of $US25.12 trillion, repeat, trillion, dollars worth of US stocks in the S&P 500.

There has rarely been such positive sentiment. Trump-inspired of course although there are a myriad of other factors you could list to justify it in the short term, anything from economic recovery to anticipation of a solid results season which is ongoing in the US.

I have our portfolios almost fully invested at the moment, but I have them on a hair trigger. When I see Wall Street fall a few hundred points in one night I will quietly start selling. This herd could turn nasty at any time and with the top of the S&P 500 long-term trading range 17 per cent below where we are now, we could see a 10 per cent correction in the US markets for absolutely no fundamental reason at all, other than the herd deciding to have a sentiment change for some invisible reason, which is usually because some large fund manager somewhere holds an asset allocation meeting and decides to sell, and the rest follow.

It can happen any day. But don't be too smart for your own good by selling before it happens. These exponential moments only come around once every decade and you can't miss them.

Read more: Market momentum has never been higher but the risk of a crash is high

Stock Market Crash ? : Top Economist Says a Drop Is Coming - by Mark Zandi

If you are a stock investor, buckle in.

Investors have enjoyed an amazing run. Stock prices are up by nearly a third over the past 18 months and seem to be hitting new record highs daily. And the run-up has been almost a straight line, with stock price volatility—the ups and downs in prices—the lowest it has ever been.

But if you are an investor, soak all of this in, because it will soon be nothing but a memory. The stock market is due for a significant correction—defined as a greater than 10% decline in stock prices—and stock returns in the next several years will be very pedestrian if they increase at all.

It’s not that the stock market is a bubble ready to burst. Bubbles are created by speculation, when investors buy a stock simply because its price has risen strongly in the recent past, and therefore conclude it will rise strongly in the foreseeable future. This clearly characterized the tech bubble that inflated around Y2K. Investors piled into the stocks of dot-com companies, many without even understanding what the Internet was. Most of the companies weren’t making any money, and few had business models that seemed likely to ever generate profits. That bubble was also fueled by margin debt, as investors borrowed aggressively against their stock holdings to purchase even more stocks.

So why am I pessimistic? The stock market is overvalued. That is, stock prices are much too high despite the good outlook for corporate earnings. The only other time in the past half century that stock prices have been so highly priced was during the tech bubble. Yes, they’re even more overpriced now than prior to the 1987 market crash.

Corporate earnings are good, but they are set to grow more slowly, since businesses will have to give their employees bigger pay increases to hold onto them, let alone hire new workers. 

With unemployment falling toward 4%, wages will slowly, but steadily accelerate. Businesses will respond by raising prices more quickly, but they won’t be able to pass through all of their higher costs to customers. Margins will come under pressure.

Intensifying wage and price pressures means that the Federal Reserve will need to raise short-term interest rates more consistently, and begin to wind down its balance sheet, which will cause long-term rates to rise. It is hard to see investors being as enthusiastic about stocks when interest rates are rising. 

Higher rates will also make it more expensive for businesses to borrow money to buy back their stock, a common practice in the current bull market.

Then there is Washington. So far, the dysfunction there hasn’t been a problem; it has only meant that lawmakers have done nothing. That is fine for a growing economy. But doing nothing won’t be a winning strategy for much longer. 

Lawmakers must soon agree on a budget or risk shutting the government down, and they must raise the Treasury debt limit or risk shutting down the global financial system. Tax reform would be nice, but odds are that if there is reform it will fall short of what investors desire.

\

Of course, there is no timing a stock market correction. It could happen tomorrow, next quarter, or next year. But that time is at hand.

The author of this report is Mark Zandi is chief economist at Moody’s Analytics. He has investments of all of the companies mentioned in this article.

Read complete report by clicking here: Stock Market Crash: Top Economist Says a Drop Is Coming | Fortune.com