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The S & P / ASX 200 index should open down 0.3%, according to futures, after finishing at 5665.20 points on Friday.
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"What surprises me the most is how certain people seem to be amazed at the volatility of the" markets ", said Friday in the United States, Mohamed El-Erian, Chief Economic Advisor at Allianz." Remember that the "unconventional policies" of central banks are intended to suppress #vol. And that's what they've done for years. Central banks have suppressed volatility for years, he said.
The gradual lifting of US interest rates by the US Federal Reserve, the rate hike in Canada and the United Kingdom, and the European Central Bank's slow but determined plan to end its bond purchases this year have makes political mistake a growing concern.
Fed policymakers continue to report that rates will rise even higher, as did Vice President Richard Clarida last week, even as the Trump administration hammered the Fed chairman. , Jerome Powell, for his desire to do so. Most market strategists view rising rates simply as a natural reaction to the strength of the economy, which partly reflects the impact of Republican tax cuts.
Rollercoaster rolls on
"Now that a critical mbad of these policies is unfolding, but gradually, #flight returns to more normal levels," El-Erian added. "The process is magnified by a transfer to fundamentals made more uncertain by slower / more divergent growth and concerns about #China and #trade." The Vix, the main measure of the volatility of Wall Street, was closed Friday at 24h16; Despite the rise recorded during the February liquidation, the index is generally sitting between 10 and 15 years this year, after hovering around 10 in the second half of 2017.
"The stock market roller coaster we've experienced this month has naturally left many investors with elbows on the fingers, but it's important to keep in mind that the fundamentals of the US economy and businesses remain strong enough, "said LPL Financial's chief strategist, John Lynch said in a comment.
The path of least resistance remains weak for the moment, even with positive data, including the annualized growth rate of 3.5% better than expected Friday for the third quarter. Employment data for October will be released this Friday.
The hopes that Amazon and Alphabet of last week would counter concerns about the profitability of the technology sector companies proved to be wrong, as both companies disappointed and quickly plunged. Amazon fell 7.8% Friday in New York; Bank of Montreal chief economist Doug estimates that 19.6% of them are entering a bear market correction since its record high in early September. Porter said.
"Adding spice to the mix, the president brought his complaint to 11 on the Fed's rate hikes, although bond yields have spent much of the week down on the stock market turbulence," he said. said Mr. Porter.
Apple reports this week
In addition to the Dow index, the S & P 500 index is also negative for 2018, down 0.6%. The Nasdaq Composite, for the moment, remains positive, up 3.8%.
This week, 138 members of the S & P 500 are due to present their results. Apple reports its fourth quarter results of the fiscal year AEDT Friday. Market strategist Ed Yardeni said that he was not as worried as investors seem to want the Fed to make a mistake that will cause a recession in 2019, or that rising labor costs Work and materials will reduce profit margins or prospects for overseas economies, especially emerging ones. markets.
"We are not even sure that the market is down in October, because of them," he said.
Mr Yardeni said that what was happening was like a foot pressing hard on the throttle, while the other continues to press the brakes.
Constituents' income from the S & P 500 index is expected to rise 22.4 percent from the third quarter, Yardeni said, citing Refinitiv data. Although this figure is down from the 23.4 percent forecast by badysts for the third quarter on July 1, "it's still awfully impressive," he said.
Similarly, industry badysts expect fourth-quarter earnings to rise 19.5%; the pace will drop from there, returning to a figure in the first half of 2019.
"So, when reading headlines filled with terrible news about tariffs, the Fed and the wage pressures, remember that, until now, profits should still be high," Yardeni said. .
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