As of last week, the stock market remained characterized by strenuous overvaluation, strenuous overbought conditions, overbullish sentiment, and hostile yield pressures. The fraud charges brought against Goldman Sachs by the SEC may or may not provide a catalyst for market weakness, but significant risk is already baked into observable market conditions. The present syndrome tends to be followed by large and abrupt losses (though with somewhat unpredictable timing). To the extent that investors tend to attribute market fluctuations to the immediate news surrounding them, the Goldman Sachs issue may become more of a subject of investor attention in the weeks ahead than it deserves. But really, is anybody actually surprised?
With regard to credit concerns, I think the best characterization of recent data is that cross-currents are building between the recovery view adopted by Wall Street, and emerging data suggesting fresh deterioration. Clear evidence of either is still absent.
On the cheerful side, Equifax reported a slight decline the first quarter delinquency rate among the mortgages it tracks, from 6.60% to 6.57%. This almost imperceptible decline was attributed by Equifax to seasonal factors, but it has been enthusiastically reported as evidence that the housing market has turned around.
Also last week, we saw upbeat first quarter earnings reports from J.P. Morgan and Bank of America, with J.P. Morgan reporting net income of $3.3 billion, and Bank of America reporting net income of $3.2 billion. In contradiction to these indications of improvement, last week included several reports like the following:
Click to read the complete John Hussman Weekly Market Commentary.
With regard to credit concerns, I think the best characterization of recent data is that cross-currents are building between the recovery view adopted by Wall Street, and emerging data suggesting fresh deterioration. Clear evidence of either is still absent.
On the cheerful side, Equifax reported a slight decline the first quarter delinquency rate among the mortgages it tracks, from 6.60% to 6.57%. This almost imperceptible decline was attributed by Equifax to seasonal factors, but it has been enthusiastically reported as evidence that the housing market has turned around.
Also last week, we saw upbeat first quarter earnings reports from J.P. Morgan and Bank of America, with J.P. Morgan reporting net income of $3.3 billion, and Bank of America reporting net income of $3.2 billion. In contradiction to these indications of improvement, last week included several reports like the following:
Click to read the complete John Hussman Weekly Market Commentary.
