Fundamentals could resurface after wrenching selloff

first_imgThe dramatic sell-off on Wall Street through most of the past two weeks could signal a capitulation-type blowout, giving fundamentals the upper hand for the next week.The current slide in stock prices, which on Friday briefly dragged the S&P 500 to levels not seen in more than a year, is reminiscent in breadth and tone of drop-downs seen during the Great Recession.Some argue the decline is warranted. In addition, the market has not seen the kind of sell-off in high volumes that signals a capitulation, and the S&P 500 could enter a bear market, more than 9% below current levels.From most indications the US economy is far from being in a recession, according to many market participants. The repricing in stocks could help the market shift back to fundamentals after years of focusing on the Federal Reserve and its ultra-low interest rate policy.That is welcome news for some in the market who have seen stocks trade on variables other than economic data and company earnings.”I actually am encouraged to see the market drop so we can just get to fair value and take it from there, then it is really determined by the path of the economy, and profits and revenues,” said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.”To me, this is really a result of Fed influence, just a reversing of all this Fed intervention.”Many point to a slowdown in China’s economy and its expected weight on global growth as a reason for the slide in stocks and the 12-year lows in crude oil futures.The Shanghai index closed Friday at its lowest level since December 2014, down more than 20% from its November high and nearly 44% from its 2015 high.”The spillover from China has been concentrated in crude oil and there are reports that commodity hedge funds have experienced a sharp increase in margin calls as the price of oil falls,” said Gail Dudack, chief investment strategist at Dudack Research Group in New York in a Friday note to clients.”Typical of most margin unwindings, selling will flow into equity markets since stocks are often the most liquid assets in portfolios. This explains why movements in the (S&P 500) have been closely aligned with crude oil in recent weeks.”Friday had some of a capitulation type feel, with 944 New York Stock Exchange issues hitting a 52-week low. It is only the fourth day since the end of 2008 that the number is above 900. It also was the seventh day in a row of more than 500 NYSE stocks at their lowest in at least a year, a streak not seen since October 2008 -the month following the bankruptcy of Lehman Brothers.Major indexes fell Friday for a third consecutive week. The S&P closed at its lowest since late August while the Nasdaq Composite ended at its lowest since October 2014.FUNDAMENTALS ON TAPUS markets are closed Monday for the Martin Luther King holiday and on Tuesday will reopen to fresh industrial output and retail sales data out of China. Chinese GDP data is also due Tuesday, late Monday on Wall Street.”Some of the (market) fears may be comforted if we get good numbers out of China Monday evening,” said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.He said if next week’s US core inflation data does not surprise on the upside and manufacturing returns to expansion, investors could feel more comfortable returning to the stock market.”That in addition to strong earnings, of course.”  Among the largest companies to report results next week are Morgan Stanley, Bank of America and Goldman Sachs in the financial world, while Starbucks and a handful of airlines will speak to the health of the consumer.last_img read more

Procession rejects postponement of quota protests

first_imgA faction of quota protesters brought out a procession at the Dhaka University campus area on Tuesday. Photo: Mosabber HossainA faction of the students and job-seeking youth has rejected the decision to postpone the demonstration demanding reforms of the quota system in public service, following talks with the government.Apparently infuriated by the postponement of the campaign before any formal announcement, the protesters in  hundreds held a rallly on the Dhaka University campus on Tuesday.Some of the protesters requested others not to bring out any procession and to wait until the government scrutises the matter and gives its decision after 7 May.In fact, the road transport and bridges minister Obaidul Quader, in a meeting with a delegation of 20 demonstrators, said they had agreed to postpone the programme until 7 May.Some protesters expressed their dissent on Monday evening. On Tuesday they brought out a procession, chanting slogans demanding reforms in the quota system in public service.The protagonists of the dialogue with the government requested all others to ignore the call to continue the campaign, reports UNB.Rashed Khan, joint convener of Bangladesh General Students’ Rights Protection Council, came up with the request while briefing reporters in front of Dhaka University Central Library premises.He alleged that a faction, from the beginning of the movement, was trying to disrupt their programme.Rashed also said that they have suspended their movement until 7 May following the assurance from the prime minister on quota reformation.He requested journalists not to cover any programme of the ‘dissidents’ as that might create confusion among people.The protesters apologised for assaulting some journalists during the Monday protest.The leaders of the council demanded an apology from agriculture minister Matia Chowdhury for her comments in parliament on Monday night.The ‘dissidents’ are in favour of carrying out their movement on the university campus, demanding reforms in the quota system within one week.last_img read more