The earnings misses by these US tech giant corporations could be the beginning of a huge re-rating of Wall Street expectations.
About Kris Sayce
For the past eight months I’ve repeatedly warned you about a major market crash I see ahead for the Aussie and world’s markets. Nothing I’ve seen has caused me to change my view. Stocks are still in perilous danger.
When we talk about Tesla being a zombie company, we mean that, if almost any other tech company did what Tesla is doing, the market and investors would see through it.
One of the themes we’ve followed is interest rates; specifically, their rise and fall. But looking at bond yields isn’t the only thing to watch.
Only a chump could reasonably suggest that central banks and governments are on the right path by taking interest rates lower and lower.
In order for real earnings for stocks match Wall Street’s estimates, earnings will have to increase by nearly 10%. Considering the average annual increase has only been 4.2% over the past three years, that seems unlikely.
After nearly seven years of central bank money printing and near-zero interest rates in the US and Europe, a stock market crash is not only likely…it’s necessary.
So far this year, the S&P/ASX 200 index is down 5.4%. Even factoring in dividends, Aussie stocks are down 1.3%.
Every bond in the bond market is intricately linked. If you can imagine the bond market as a family tree, US government bonds would be at the top.
Interestingly, if you’ve heard of the Rule of 72, you should know that it works with negative interest rates too.
After 40-plus years of cheap money and easy credit, Vern says the Aussie economy now faces a long period of depressed asset prices.
If I had the foresight at the time, perhaps that should have been a warning of what was to come for the Greek economy.
We aren’t ‘perma-bears’. But, by the same token, we aren’t ‘perma-bulls’, either. Instead, we just know that neither bull markets nor bear markets can last forever.
Where the US dominated the world’s economy for all of the 20th century, and most of the 21st century so far, China is on the verge of taking over.
Make no mistake, the currency wars won’t have a happy ending. Years of low interest rates and money printing won’t result in a victory that anyone can be proud of.