Mirhaydari: Bonds Signaling Stock Trouble

“Stocks ended last week on a high note … driven by a batch of soft economic data, raising hopes that the Federal Reserve will be forced to delay its first rate hike since 2006 into the middle of 2016. Retail sales missed expectations. Industrial production and job openings were weak. We’ve also got the continuation of what’s expected to be a soft earnings season as a strong dollar and weak commodities prices weigh on profits.

“But while stocks are ebullient at the thought of the Fed’s 0 percent interest rate policy continuing into its ninth calendar year, the bond market is decidedly less bubbly. In fact, the fixed income market is sending a number of warning signals that a long and powerful credit cycle is ending. …

“[M]ore debt is becoming less and less beneficial to corporations. Older, high-yield debt has now mostly been replaced. … The feeling that we’re near the end of the road on all of this can be seen in the action in Wal-Mart (WMT) last week: Shares lost 11.8 percent in the three days through Friday after the company said fiscal 2016 sales would flatline and fiscal 2017 earnings per share would drop …

“When more debt-funded stock buybacks can’t juice the stock price, it’s time to get worried. Historically, when Wal-Mart’s share price collapsed, the broad market wasn’t far behind.”

— Excerpt contributed by Jason Kelly


Z-val: Anthony Mirhaydari
Via: The Fiscal Times
Date: 10/19/15
Disposition: Short-Term Bearish
S&P 500 on 10/19/15: 2034
S&P 500 on 1/19/16: 1881
Change: -7.5%
Judgment: Right

Z-val definition and more forecasts in The Z-val Zone.



This Forecast


of 2



Created with Snap
This entry was posted in Z-vals and tagged . Bookmark the permalink. Both comments and trackbacks are currently closed.
  • Here are your three options:

    Option 1: Annual Subscription (no refunds)

    For just $200 per year, you’ll receive everything listed above to completely upgrade the way you manage your investments. This is 17% cheaper than the monthly option. This is what I recommend:

    Option 2:Monthly Subscription (no refunds)

    If you'd like to try The Kelly Letter  without paying the full year, you can pay $20 per month.

    Option 3:Free Email List

    If you'd like to hear more from me but aren't ready to part with any money yet, you're welcome to join my free email list:

    Join the free list

    Thank you for the work you do. You're a household name here and my wife and I often discuss your letters on Sundays. My ten- and seven-year-old children recognize your name and will eventually be taught to invest using 3Sig and 6Sig. You've had an enormously positive impact on our investing and inspired me to look at the world in more rational and clear terms than I did years ago. I'm sure that thousands of others would say the same. Kelly Letter subscriber Matt Barnes
    Matt Barnes
    Product Line Director

    Join Matt and thousands of other rational investors to invest without stress.

    Subscribe to The Kelly Letter  now!

Bestselling Financial Author