(from the same article - Lance Roberts)
While it may seem for the moment that stock prices can remain detached from the economic devastation, it is likely not the case indefinitely. Such is especially the case given stocks are rising into a increasing list of uncertainties. (Adapted from Doug Kass.)
- The “value proposition” no longer exists.
- A summer swoon? Seasonality is coming into play.
- Corporate profits have been flat since 2014 and are likely to deteriorate markedly.
- My S&P EPS estimates are well below consensus at $80-90/share.
- Economic challenges going forward will absorb a vast majority of the Fed’s liquidity.
- The Federal Reserve is already rapidly slowing the rate of QE
- 5-stocks dominate the market and are responsible for the rally.
- Small- and Mid-caps stocks are sorely lagging.
- Market participants have rapidly returned to exuberance during the rally.
- No one wants to buy a “bear market” bottom.
- Surging debts and deficits are economic retardants, which will eventually reflect in earnings, profits, and weaker economic growth.
- A Democratic Presidential Win Could Be “Market Unfriendly”
- Buyback activity, which has comprised almost the entirety of the markets advance over the last several years, is slowing markedly.
- Pension plans problems are likely to become even larger problems, as discussed previously.
- Bonds do not agree with the stock market. Bonds, more often than not, are right.
- Trump is on the verge of restarting the “Trade War” with China.
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