Don't Worry "Everything Bad is Priced In"

The stock market has turned the corner. Everythig bad is priced in.

By now, investors priced in all the bad things they could price in: concerns about trade wars, geopolitics, rising rates and even fears that earnings growth peaked. But the economy is still growing and earnings are expected to grow by double digits this year and next,” said Karyn Cavanaugh, senior market strategist at Voya Financial.

“We must keep in mind that the first-quarter earnings have been boosted a lot by a one-time tax windfall. But second-quarter earnings are expected to grow by another 20% even without the windfall but as the underlying corporate tax cuts start to kick in,” Cavanaugh added.

Not Priced In

  1. Insane valuations
  2. Mideast war
  3. China slowdown
  4. Eurozone slowdown
  5. Change in attitudes towards stocks

Of those, number 1 and number 5 are standouts.

Mike "Mish" Shedlock

Comments
No. 1-17
clovisdad
clovisdad

I presume that if all the bad stuff is priced in, so is the good stuff. That's how markets work. Markets do not see the future, nor do the rest of us generally. Perhaps there are some people who can see further than the rest of us, but they are most likely specialists who will only see a small part, which can easily be overwhelmed by that which they don't see.

clovisdad
clovisdad

I presume that if all the bad stuff is priced in, so is the good stuff. That's how markets work. Markets do not see the future, nor do the rest of us generally. Perhaps there are some people who can see further than the rest of us, but they are most likely specialists who will only see a small part, which can easily be overwhelmed by that which they don't see.

theplanningmotive
theplanningmotive

Let us wait for 22nd May when the BEA announces non-financial corporate profits for the first quarter. This wipes away all the spurious gains.

Six000mileyear
Six000mileyear

Karyn Cavanaugh's comments are expected at major market turns and make for a good contrarian indicator.

truthseeker
truthseeker

I neglected to mention that stock options do make since when young companies are trying to hire first class talent since they don’t have the financial resources to compete with large companies in this situation.

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