A global bear market is alive and well
Darn it. We were actually going to lay low until this weekend when we planned to hit you between the eyes with what has been our steady view on the global equity market, a bear market that is.
While U.S. stocks shook off an early post-New Year’s downdraft, we remind you that foreign markets were and are telegraphing slowdowns. China delivered another batch of disappointing data after its Caixin Purchasing Managers’ Index – a private survey of activity among small- and medium-sized businesses – dropped 0.6 points to 49.4 in December, slipping below 50 for the first time since May 2017. A reading below 50 indicates contraction.
We have been telling you that the bulk of economic data and earning's estimates would be coming down and that the norm would be downside surprises. In other words, the markets had been yelling and screaming with a bull horn. The Federal Reserve, in December, signaled it will likely slow the pace of planned rate hikes while housing, durable goods and many other economic data points have missed estimates.
We are not immune. Estimates for 4Q GDP have come down from the high 3+ percent to the 2+ percent range. The markets are predicting possibly even lower. Estimates for earnings growth have been coming down as well, to about 7 percent growth for 2019. We believe that number remains much, much too high.
The bear market in stocks and credit continues around the globe. Too many continue to bark out past fundamentals which matter not. Too many continue to call it a correction in a bull market. Too many continue to say buy the dip. Too many continue to use the words such as cheap, value, over-done, over-reaction and all that crap. We have news for you. Markets do not care a shred about opinion which is why we interpret price action for investors.
We were actually in hopes of a couple more weeks of drifting higher for another big short selling opportunity, but looks like that may not happen in early 2019. Bearish conditions continue. The road map for a bear market continues to play out in classic fashion.
Gary Kaltbaum is a registered investment advisor with more than 30 years of experience in the markets. He is owner and president of Kaltbaum Capital Management, a financial investment advisory firm headquartered in Orlando, Florida. He is a Fox News Channel Business Contributor regularly appearing on Fox News Channel and the Fox Business Network. Gary is the author of the book “The Investors Edge” and is also the host of a nationally syndicated radio show with the same title “Investors Edge” which is broadcast on numerous stations across the U.S.