Global Shares Kick Off the New Year In the Red, Gold Up

The S&P 500, FTSE (UK), DAX (Germany) are all deep in the read as I type. Gold is up.

As of about 4:00 AM Central, the US markets are poised to start about 1.5% in the red.

We have seen a lot of miracle closes in the waning days of 2018. This could be another one, but I doubt it.

The Wall Street Journal reports Stocks Open 2019 With a Tumble Over Weak Chinese Data.

In Asia, weak economic data sent markets lower. The China Caixin manufacturing purchasing managers index fell to 49.7 in December, according to data released Wednesday. That is the first time the sector has been in contraction territory—below 50—since May 2017.

Hong Kong’s Hang Seng Index led declines, falling 2.4% midday. The Shanghai Composite Index was off by 1.1% and Australia’s S&P/ASX was down 1.5%. Japanese stocks were closed for a public holiday.

This has little or nothing to do with weak Chinese data. Equities are horrendously overpriced and the US is headed for a recession.

Happy New Year

Mike "Mish" Shedlock

Comments (6)
No. 1-6
Realist
Realist

Happy New Year Mish! Both human traders and software based trading algos react to news and data as it is released. As a result, the swings we are witnessing in markets these days are indeed an immediate reaction to this data. In addition, central banks and governments are also more closely attuned to this data. That's why I believe that a large drop in markets or negative economic news will result in relatively quick responses. Oddly, this actually contributes to a lot of the volatility. However, it is also the reason that I do not expect a deep recession any time soon. A mild recession is possible, but its not on my radar for this year.

Bam_Man
Bam_Man

Not to worry. The "Pension Fairy" will make another miraculous appearance at 3:58 pm (or earlier) to ensure that almost everyone leaves the casino happy today.

shamrock
shamrock

S&P 500 trailing P/E is around 16, it's really hard to make a case that's overpriced, much less horrendously overpriced, based on current expectations. The bear case is banking on a recession, not valuation.

Bam_Man
Bam_Man

Yes, surely corporate profits "have reached a permanently high plateau".

stillCJ
stillCJ

Editor

Mish, maybe you should have waited until the end of the session, when it all turned green. But there's always Turnaround Tuesday!