Well, that sure didn’t take long. Many had been hoping that 2019 would be a calmer year for Wall Street, but so far that has not materialized. In fact, a surprise announcement by Apple has just sparked another wave of panic selling on Wall Street. In a letter to shareholders, Apple CEO Tim Cook admitted that first quarter revenue is going to be way, way below expectations. That immediately set off “flash crashes” all over the globe as investors reacted to this unexpected news. According to Cook, the primary reason for the coming “revenue shortfall” is a slowing economy in China…
Apple said it sees first-quarter revenue of $84 billion vs. a previous guidance of a range of $89 billion and $93 billion. Analysts expected revenue of $91.3 billion for the period, according to the consensus estimate from FactSet. Apple blamed most of the revenue shortfall for struggling business in China. But the company also said that upgrades by customers in other countries were “not as strong as we thought they would be.”
Once this letter was released, many investors rushed to dump as much Apple stock as they could, and trading in the stock was temporarily halted…
After being halted temporarily, Apple shares resumed trading at 4:50 p.m. ET, quickly falling over 8 percent to $145.12. The plunging shares wiped out more than $50 billion in the company’s market value, according to Bloomberg data. Apple, which was trading around $146 in after-hours trading is now down more than 37 percent from its Oct. 3 high and has fallen mightily since becoming the first U.S. company to reach a $1 trillion market cap in August.
And many investors generally assume that pretty much any bad news for Apple is bad news for the tech sector as a whole, and so just about every big tech stock was being pummeled in the aftermath of this surprise announcement. The following numbers come from Business Insider…
Amazon (AMZN) down 3%
Microsoft (MSFT) down 2%
Facebook (FB) down 1.5%
Alphabet (GOOG) down nearly 1%
Intel (INTC) down 2%
Advanced Micro Devices down nearly 3%
NVIDIA down nearly 2.5%
Qualcomm down 2%
Alibaba down 1.7%
As I warned just yesterday, it looks like 2019 is going to be a very, very challenging year.
At this point the mood of the nation has turned downright gloomy. Economic activity is slowing down all around the globe, the current government shutdown looks like it could last for a very long time, the endless investigations in Washington threaten to derail the Trump presidency, our trade war with China is becoming more painful with each passing week, and even many former optimists are openly admitting that the outlook for Wall Street looks very grim. For example, just check out what venture capitalist Fred Wilson is saying…
Like many of his peers in the Valley, legendary New York VC Fred Wilson – the founder of Union Square Ventures – is typically a dewy eyed optimist (just take a look at Union Ventures’ many flailing crypto investments). But in a surprising twist, a list of Wilson’s market calls for 2019 is so gloomy, it reads as if it were ghostwritten by SocGen’s Albert Edwards.
According to Wilson, the S&P 500 will visit 2,000 (a roughly 500 point – 25% – drop from current levels) some time during 2019 as the bottom falls out of the global economy. President Trump will agree to resign after being impeached by the House following the publication of the Mueller report. And the slate of highly anticipated tech IPOs (Uber, Lyft, Airbnb etc.) will fall flat. In other words, 2019 will be a “doozy”, as Wilson describes it.
The new session of Congress begins at noon on Thursday, and Nancy Pelosi will once again be the Speaker of the House. If something suddenly happened to President Trump and Vice-President Pence, she would become the president of the United States.
I don’t know about you, but just the thought of that chills me to the bone.
Now that the Democrats control the House, they are going to investigate the living daylights out of Trump, and it is likely to be a very, very tough year for him.
Many on the left are entirely convinced that Trump will be out of the White House by the end of 2019. Perhaps they will be successful in that mission, but instead of fixing things that would just unleash a whole lot more chaos.
As this year rolls along, the bickering and fighting in Washington is going to continue to intensify, but meanwhile very little is going to get done. With the Democrats in control of the House, the Republicans in control of the Senate, and Trump in control of the White House we have a recipe for gridlock that is pretty much unprecedented in modern American history.
What that means is that if things go really, really bad, we shouldn’t really expect any solutions to come out of Washington. We desperately need real change, but the voters just keep on sending the same old faces back to D.C. and they just keep on pushing the same old tired policies.
It is funny how I often drift into talking about politics, but the truth is that economics and politics are inseparable. And it is undeniable that what is going on in D.C. is going to have a dramatic impact on the U.S. economy throughout 2019.
As I write this, the numbers coming from Wall Street just keep getting worse and worse. It looks like it is going to be a really tough day, and without a doubt it looks like it is going to be a really tough year.
Showing posts with label Recession. Show all posts
Showing posts with label Recession. Show all posts
Thursday, January 3, 2019
Tuesday, January 1, 2019
2018 Was The Worst Year For The Stock Market Since The Financial Crisis Of 2008
Now that the year is finally over, we can officially say that 2018 was the worst year for stocks in an entire decade. Not since the last financial crisis have we had a year like this, and many believe that 2019 will be even worse. And of course the truth is that stocks are still tremendously overvalued. Stock valuation ratios always return to their long-term averages eventually, and if the Dow Jones Industrial Average plunged another 8,000 points from the current level that would begin to get us into that neighborhood. Unfortunately, the system is so highly leveraged that it will not be able to handle a price decline of that magnitude. The relatively modest drops that we have seen already have caused a tremendous amount of chaos on Wall Street, and a full-blown meltdown would quickly result in a nightmare scenario potentially even worse than what we experienced in 2008.
For investors that had become accustomed to large gains year after year, 2018 was a brutal wake up call. The following comes from Fox Business…
2018 may be remembered as the year the Grinch stole your retirement or stock investment account.
December was the worst month for the Dow Jones Industrial Average and the S&P 500 since 1931, as tracked by our partners at Dow Jones Market Data Group. The S&P 500, the broadest measure of stocks, lost 9 percent and the Dow over 8.5 percent.
For the year, stocks turned in the worst performance since 2008.
According to the bulls, this wasn’t supposed to happen. In the middle of the year, they were projecting that a “booming” U.S. economy would continue to drive stock prices higher, but instead we just witnessed the worst three month stretch for stocks since the 4th quarter of 2008, and the month of December was the most painful of all…
December was a particularly dreadful month: The S&P 500 was down 9% and the Dow was down 8.7% — the worst December since 1931. In one seven-day stretch, the Dow fell by 350 points or more six times. This year’s Christmas Eve was the worst ever for the index.
The S&P 500 was up or down more than 1% nine times in December alone, compared to eight times in all of 2017. It moved that much 64 times during the year.
Not even in 2008 did we have a December like this. This was the second worst December for the Dow Jones Industrial Average ever, and you know that things are getting bad when you have to go all the way back to the Great Depression of the 1930s to find a time when stock prices were deteriorating more rapidly.
The amount of stock market wealth that has already been wiped out is absolutely staggering. For example, Facebook CEO Mark Zuckerberg’s net worth plummeted by 20 billion dollars in 2018…
American billionaires saw the biggest loss this year, collectively dropping $76 billion, largely because of December’s market rout. Mark Zuckerberg saw the sharpest drop in 2018 as Facebook Inc. veered from crisis to crisis. His net worth fell nearly $20 billion, leaving the 34-year-old with a $53 billion fortune.
And this was not just a U.S. phenomenon. Virtually every major stock market around the world was hit extremely hard, and a total of nearly 12 trillion dollars in global stock market wealth was wiped out over the course of the year.
The only time when more stock market wealth was wiped out in a single year was in 2008.
Are you starting to understand the magnitude of the crisis that has now erupted?
Of course the mainstream media continues to insist that this is just a temporary thing, and that markets will begin surging again soon as investors start scooping up stocks at “bargain prices”. For example, just check out this excerpt from a CNBC article that was posted on Monday…
John Stoltzfus, chief investment strategist at Oppenheimer Asset Management, said these declines are “setting the stage for upward surprises in 2019.”
“With what we believe to be almost all but the kitchen sink priced into current valuations, we see opportunity for multiples to return to levels seen at the end of the third quarter … with multiple expansions resulting in a global equity rebound in the coming year,” Stoltzfus wrote in a note.
It sure would be nice if the optimists are correct. Even for those that are relatively poor, the truth is that we live very comfortably in the United States today. The vast majority of us really have nothing to complain about, because we are enjoying a standard of living that is substantially higher than almost everyone else in the world.
Of course we don’t actually deserve this standard of living, but most Americans don’t want to hear that. We consume far more than we produce, and only by going into increasingly absurd amounts of debt are we able to keep the game going.
It is easy to say that this bubble will inevitably burst, but it will be a very sad day when it does.
Those that gleefully look forward to the coming collapse of our financial system do not really understand what we will be facing. It won’t be like 2008 when the authorities were able to patch things together and fairly rapidly restore our standard of living. When this thing finally shatters, nobody is going to be able to put the pieces back together like they were before ever again.
This is a very dark time. As I have stressed repeatedly, the elements for a “perfect storm” have been rapidly coming together, and 2019 is going to look a whole lot different than 2018 did.
For investors that had become accustomed to large gains year after year, 2018 was a brutal wake up call. The following comes from Fox Business…
2018 may be remembered as the year the Grinch stole your retirement or stock investment account.
December was the worst month for the Dow Jones Industrial Average and the S&P 500 since 1931, as tracked by our partners at Dow Jones Market Data Group. The S&P 500, the broadest measure of stocks, lost 9 percent and the Dow over 8.5 percent.
For the year, stocks turned in the worst performance since 2008.
According to the bulls, this wasn’t supposed to happen. In the middle of the year, they were projecting that a “booming” U.S. economy would continue to drive stock prices higher, but instead we just witnessed the worst three month stretch for stocks since the 4th quarter of 2008, and the month of December was the most painful of all…
December was a particularly dreadful month: The S&P 500 was down 9% and the Dow was down 8.7% — the worst December since 1931. In one seven-day stretch, the Dow fell by 350 points or more six times. This year’s Christmas Eve was the worst ever for the index.
The S&P 500 was up or down more than 1% nine times in December alone, compared to eight times in all of 2017. It moved that much 64 times during the year.
Not even in 2008 did we have a December like this. This was the second worst December for the Dow Jones Industrial Average ever, and you know that things are getting bad when you have to go all the way back to the Great Depression of the 1930s to find a time when stock prices were deteriorating more rapidly.
The amount of stock market wealth that has already been wiped out is absolutely staggering. For example, Facebook CEO Mark Zuckerberg’s net worth plummeted by 20 billion dollars in 2018…
American billionaires saw the biggest loss this year, collectively dropping $76 billion, largely because of December’s market rout. Mark Zuckerberg saw the sharpest drop in 2018 as Facebook Inc. veered from crisis to crisis. His net worth fell nearly $20 billion, leaving the 34-year-old with a $53 billion fortune.
And this was not just a U.S. phenomenon. Virtually every major stock market around the world was hit extremely hard, and a total of nearly 12 trillion dollars in global stock market wealth was wiped out over the course of the year.
The only time when more stock market wealth was wiped out in a single year was in 2008.
Are you starting to understand the magnitude of the crisis that has now erupted?
Of course the mainstream media continues to insist that this is just a temporary thing, and that markets will begin surging again soon as investors start scooping up stocks at “bargain prices”. For example, just check out this excerpt from a CNBC article that was posted on Monday…
John Stoltzfus, chief investment strategist at Oppenheimer Asset Management, said these declines are “setting the stage for upward surprises in 2019.”
“With what we believe to be almost all but the kitchen sink priced into current valuations, we see opportunity for multiples to return to levels seen at the end of the third quarter … with multiple expansions resulting in a global equity rebound in the coming year,” Stoltzfus wrote in a note.
It sure would be nice if the optimists are correct. Even for those that are relatively poor, the truth is that we live very comfortably in the United States today. The vast majority of us really have nothing to complain about, because we are enjoying a standard of living that is substantially higher than almost everyone else in the world.
Of course we don’t actually deserve this standard of living, but most Americans don’t want to hear that. We consume far more than we produce, and only by going into increasingly absurd amounts of debt are we able to keep the game going.
It is easy to say that this bubble will inevitably burst, but it will be a very sad day when it does.
Those that gleefully look forward to the coming collapse of our financial system do not really understand what we will be facing. It won’t be like 2008 when the authorities were able to patch things together and fairly rapidly restore our standard of living. When this thing finally shatters, nobody is going to be able to put the pieces back together like they were before ever again.
This is a very dark time. As I have stressed repeatedly, the elements for a “perfect storm” have been rapidly coming together, and 2019 is going to look a whole lot different than 2018 did.
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