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The government had just announced that more than 650,000 jobs had been lost in the previous month. The Dow and the S & P 500 each lost 50% of their October 2007 highs.
And there did not seem to be an end to the sadness of Wall Street and Main Street.
But now that this bull market is approaching 10 years, some people wonder how long the recovery can continue. Inventories soared in 2019 after the tumultuous fourth quarter of last year.
This has led to new questions about whether stocks are too expensive.
The S & P 500 had traded at 18 times earnings estimates for 2019 before the stock ratcheted up last fall. This multiple fell to 14, as a result of the selloff. But he is now 16 years old after the start of the index in 2019 with a 12% pop.
"What has happened in this rally is that valuations are up," said Hugo Rogers, chief investment strategist at Deltec. "The stocks were oversold last year, but they are no longer cheap now."
Profit growth is expected to slow this year after a strong 2019 year. This is partly due to the mitigation of the effects of the corporate tax cut. But economic weakness in Italy and Germany, concerns over Brexit and slower growth in China and India are also cause for concern.
And even though the Federal Reserve has already indicated that it would probably not increase interest rates this year, the US economy – and corporate earnings – could begin to slow down due to lag compared to previous rate hikes. The Fed has raised rates seven times in the last two years. This will particularly hurt highly indebted companies.
"Markets may be at the top of the list," said Randy Swan, CEO of Swan Global Investments. "The damage caused by Fed rate hikes could already be done."
Of course, it's fair to point out that bull markets are not like a milk cartridge. They do not have an expiration date. Inventories could continue to climb as income and the economy grow.
But complacency can set in as investors continue to ignore the risks.
"In hindsight, it seems too obvious to understand how and why the problems hit," wrote DWS strategists. "Most recessions and bear markets are not like that – they tend to surprise central bankers, investors, and even economists – all of this argues for caution."
Another strong report could be fruit juice markets, which ended February on a positive note. The Dow rose 3.7%. The S & P 500 finished up 3% and the Nasdaq up 3.4%.
Good economic news would boost investor optimism. They already fear the likelihood of a trade agreement between the United States and China, as well as the Fed's decision to suspend the rise in interest rates.
3. Inmates and the deprived of the retail trade: The verdict comes from the holiday season last year: there is a growing gap between the best and the worst performers in the retail trade.
4. Coming next week:
Friday – Report on jobs in the United States
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