International US markets overvalued? - Early signs of flight to safety (USD) emerging

Few observations....

1. Credit markets tightening noticeably over the past 6 months.
2. Bond values falling sharply (expect rising interest rates).
3. US interest rates now being touted to go in to slow rising environment.
4. Gold breaking out violently to downside from long term triangle pattern last night on futures market. Gold is basically the anti-$ and inversely correlates with USD.
5. SPY after many months rising in a row is nearing expected resistance at expected end of Elliott wave 5 (wave set began at GFC low so MAJOR context wave set not just recent wiggle).
6. Other US indices similarly coming in to resistance.
7. Apparently this mega rise is due to strong earnings growth, not true when we consider reported earnings over long term (see below).
8. USD currency pairs turned up strongly also, USDJPY is important to context of USD movement.



Many more hints also emerging in other markets that we are quickly moving towards a 'risk off' environment at institutional level. Expect the usual Xmas rally and would not be at all surprised if high came JUST before Xmas 2017. Charts are backing this fundamentally driven view.

A continuing bull run in US market next year is a low probability.

Out of time now will post more charts later.

 

I did hear credit was much easier and looks like it is being tightened up again which is interesting. All the old ways to create inflation are not working...

 

Update - SPY coming in to resistance

Would not be surprised to see timing of top during X mas/end of year.



No advice, DYOR

 

But @MTR keeps telling us that the American economy is booming? Your charts would say otherwise....

 

It certainly is, but I am not here to convince you

I would be more worried about the Australian markets and what we are seeing today.
2018 could get nasty, especially for those who are highly leveraged.

Aussie dollar will fall to US68c, with economy stuck in slow lane: Westpac

U.S. economy records fastest growth in 3 years

What Will the Economy Do in 2018 and Beyond?

 

Of course nothing is certain and no one particular view is worth more than any other, often information will contradict like this.

The interesting thing is both views could be correct in the sense that the long term may continue hold a good bull run however the short term may produce a pullback allowing for opportunities to accumulate into the long term bull run, this is essentially how I like to accumulate and I actually applaud @MTR for choosing a strong market to be interested in.

As we all realise equity markets are elastic and will tend go from periods of strength lasting a number of months or years to periods of weakness also lasting some months and back again etc with the general trend being up. Just like with any quality asset, of course we all wish to buy in to the market at 'advantaged pricing' and my chart based contributions here are mainly focussed helping people achieve that in an accurate and planned way.

@MTR has made phenomenal contributions to this place and besides that....has the best avatar collection going!!

 

Forgot to add this, interesting times..... lets see what happens next now that the US tax bill passed senate.

Trump predicts economic boom as final tax bill heads for House, Senate

 

My humble opinion, this is not a great thing for the people of the states, it will just make the rich richer and the poor....well things will get a whole lot worse for them.
Again, my opinioN, could go the other way!

 

Lol love this thread Alex, so in other words no one has a clue what's happening till it's happened. Good to see what's happened yesterday today. I'll check back in tomorrow to see what's happened today.

 

LOL!! I'm sure you can relate to that @Barny ....and thanks for adding such a tremendously insightful post to the thread.

Guess we shouldn't be speculating (because no one ever speculates on these threads!!) and gives a viewpoint here.

Maybe you should re-read all the posts I think you missed quite a bit of specific info earlier. My view has not changed, US market downside coming in short term. Likely to top out end of year, SPY price level around 2700- 3000.

 

It really depends what you read or believe, lots of scare mongering by media... Lets see what happens..... Personally I think it will be great for the economy... Time will tell
I am loading up..

GOP tax cuts will strengthen our economy and drive Democrats crazy

 

Citing media articles that support your opinion is not citing facts that support your argument. Everyone can use google.

Recording growth is great, but it went from negative growth to slightly positive. Hardly something to instill bullish opinions.

Confidence in the American economy might be high and that is reflected in sharemarket pricing. But the reality is that the price to value ratio of the American share market is much higher now that before the GFC. You only need one event to trigger the House of cards to collapse. What happens when interest rates go up?

I’ll sit on cash and wait it out.

 

Interest rates in US have already gone up at least 3 times remember they are at a much lower base than Oz IR.

You probably need to re read one of the articles, GPD is one of the benchmarks of measuring the health of an economy.

I am not playing in the US stock market

My game is US property, the reason its booming is simple- supply and demand. Inventory at historical lows, unlike Oz they don't have any foreign regulations when it comes to buying as long as you have the cash

On the flip side do I need to be concerned if my properties are generating income from day 1???

 

Actually I reckin the $A will strengthen against the US dollar.....whilst fall against the Pound and Euro.

There is a lot of nervousness around fortress America...I expect that Europe will start to turn the corner. Already a lot of people are putting money into Real Estate in Spain....

 

Agree, European equities markets also look to have more potential than most of the other majors at this point in time.

The other thing that is worth considering is a 'flight to safety' may not focus so much on the USD these days and investors may choose a different instrument to pile in to for safety....hmmmmmm

 

Correct...I also feel that unless address inequalities....there will be anarchy.

The amount of disenfranchised people will make some cities hot beds of unrest....

The other issue...is that over time there will be a backlash against US companies...unless their policies change.

China is about to overtake US as the largest economy as soon as 2023 and definitely by 2025...India is expected to be the second largest economy by 2050..and Indonesia the 5 largest...Australia won't be even in the G20 by 2050...something to think about .....but its close distance to Asia will make it a real estate hotspot.

If Indonesia becomes the 5th largest economy the prospects for Perth are huge!

 

Although CAPE is far from perfect especially with short term prediction the following might be useful in where to deploy capital for the longer term going forward. This lot produce quality research. Note the US data:

StarCapital AG - Disclaimer

 

No idea? Lets watch.

Will revisit this thread in 6 months and see whether Westpac predictions regarding Au$ falling to 68 next year actually happens.

Will also post on the Australian Dollar thread, its been a roller coaster that is for sure.

MTR

 

Hate him or like him.... this is what happened in 2017 in USA, I guess you could say they had a good year


President Suggests You Watch This Clip Of Sean Hannity Listing 2017 Accomplishments

 

Relevant and interesting article if you have AFR access: http://www.afr.com/markets/beware-t...-markets-enter-euphoric-stage-20171222-h096e8