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Sun Jul 5, 2020, 10:46 PM

Stock futures rise even as coronavirus cases set records in FL, TX (JFC, here we go again)

Dow Futures is up 257 points (1.0%) and rising as I post this 1037p ET

I broke a couple of paragraphs into sentences to make it easier to read..

Developments in the crisis continued to march from bad to worse over the long holiday weekend. New COVID-19 cases in some of the new hot spots in the South and West rose by records — including in current epicenters Florida and Texas on Saturday.

The World Health Organization said a record 212,326 coronavirus diagnoses were confirmed globally in 24 hours as of Saturday, with the United States, Brazil and India showing the largest increases.

The Lone Star State ((Texass)) reported 3,449 new cases of COVID-19 as of Sunday for a 1.8% rise over the prior day — bringing the total number of infections so far in the state to 195,239.

Meanwhile, California’s new cases rose by 5,410 for a 2.1% one-day increase, coming in below the 14-day average for new case growth in the state.

Arizona’s one-day case increase of 3,536, or 3.7% over the prior day, was slightly below the state’s two-week average growth of 4.1%.

The recent resurgences in coronavirus cases in some parts of the country led economists at Goldman Sachs to lower their expectations for U.S. gross domestic product (GDP) growth this year. This comes despite new economic data, including the June jobs report, come in well above expectations.

... President Donald Trump on Saturday signed into law an extension for applications into the Paycheck Protection Program (PPP), a key component of the virus-related fiscal stimulus intended to help small businesses receive subsidies for costs including payrolls. The legislation extended the June 30 deadline to apply for the program to August 8.

On Thursday, Treasury Secretary Steven Mnuchin told reporters at the White House that the Trump administration was “going to seriously consider” another round of direct checks to taxpayers, following the $1,200 checks sent to Americans under a certain income threshold that had been approved in March.

Just throw more money at it. Again and again through Nov 3. MAGA Magic! Anyway the last 2 paragraphs is what's apparently fueling the futures rise.

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Response to progree (Original post)

Sun Jul 5, 2020, 10:55 PM

1. as my long time investment advisor told me long ago, the stock market has no heart and no soul

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Response to NRaleighLiberal (Reply #1)

Sun Jul 5, 2020, 11:12 PM

2. Oh, I don't expect the market to do any mourning over this shit, only an idiot would expect that

but with a slow-down in openings and some reclosings, the future doesn't look bright to me for earnings for a long time. Certainly a lot less bright than things looked like in mid-June. And eventually at some point P/E ratios are going to be so out of whack that the bubble pops. (They say earnings drive the market, but I guess that was back in some other era, and the world's changed and we don't have to worry our pretty little heads off about earnings anymore).

And there's no guarantee that when the bubble pops, it will just get over it in 5 or 6 years like the dot-com bust and the housing bust and go on to setting new highs.

I'm reminded that it took the Dow 25 years to get back to its 1929 high. it took the Dow 16 years to get back to its 1966 high. And across the big pond, the Nikkei is still down about 42% from where it was at the end of 1989, more than 30 years ago.

But there's apparently the widespread thinking out there that "this time it will be different", P/E ratios don't matter, valuations don't matter, earning prospects don't matter, every year will be a presidential election year forever (so more and more money will be thrown at it endlessly, cheering the markets no matter what the fundamentals).

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Response to progree (Reply #2)

Sun Jul 5, 2020, 11:15 PM

3. It is just insane.

I am 64 - will start SS at 66 yrs, 4 mo - I am in a selection of mutual funds that have done well. But...she (my adviser) and I are watching carefully to see which way the wind blows.

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Response to NRaleighLiberal (Reply #3)

Sun Jul 5, 2020, 11:40 PM

4. I see that Q2 earnings will start coming out this week, and I know what's going to happen 😊 👀

Most of them will be horrible, but not as bad as expected, so the market will go up and up and up.

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Response to progree (Original post)

Mon Jul 6, 2020, 10:23 AM

5. Goldman Sachs thinks there might be trouble in paradise

How Goldman Sachs just succinctly told people to start selling their overvalued stocks, Yahoo Finance, 7/6/20
The forward price-to-earnings multiple on the S&P 500 is 21.7 times, a level not seen since the late 1990s internet bubble, according to Yardeni Research. This level of valuation seems to blatantly ignore the headline risk of the coming second quarter earnings season, where S&P 500 earnings are expected to tank 43% year-over-year. So far, there have been 34 negative pre-announcements on second quarter earnings from companies compared to 25 positive, per Refinitiv data. Second quarter revenue is projected to plunge 11.8% from the prior year.

Meanwhile, countless tech stocks have detached from any form of economic reality.

The Nasdaq High-Low ratio has consistently hovered around 1, points out SunDial Capital Research, meaning that far more tech stocks trade at 52-week highs as opposed to 52-week lows. Tesla surpassed Toyota as the world’s most valuable automaker last week even as its profit outlook is far from certain. Tesla’s new electric truck rival Nikola is now valued at more than $20 billion after debuting on the Nasdaq on June 4.

The company has yet to produce any of its cool trucks and has no profits to speak of yet.

“What you’re looking at today is a sustained rally on the likelihood that we’ll see some sort of therapeutics or treatments come to the fore later this year or in early 2021.

The market reminds me of this Scottsdale, Arizona bar scene (3 weeks ago), thanks TomCADem

What me worry?

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Response to progree (Original post)

Mon Jul 6, 2020, 03:57 PM

6. They're rising on the expectation of more largesse

flooding into the coffers of the corporate and 0.1% via more disaster relief money to be grabbed by their greedy hands.

It'll happen, too. Congress is between a rock and a hard place, it must be seen as trying to relieve suffering, even knowing the money will be stolen long before it gets anywhere it is truly needed.

This is the end game, the great free for all while they grab while the grabbing is good.

It's just as well, the lesson of countries that just print money is clear: the net result of running the printing presses with ho expectation of revenue creates runaway inflation. So far, that inflation has been largely restricted to the stock market.

There are several major debt bombs set to explode. That Dumdum is printing money to dealy the detonation speaks volumes to me about Republican desperation.

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