re: There are some major issues lurking in the US financial markets

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See, we can actually learn from each other.

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Okay....so when am I going to start learning something from you??

Did he just try to state the QQQ (which is the nasdaq 100) was holding back the S&P 500?? Lol

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Everything that I’m reading shows that futures are pricing in no rate hikes in 2019

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Would you mind linking to what you're reading that says that. I'd like to read it. Thanks.

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you’re saying the Fed will raise three times?

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No, I said the article I read a couple of days ago said three times.

I also see other articles that say it will only be 2 rate hikes this year. Like this article here, January 10, 2019

And this one...

I've seen nothing that says the Fed is not going to raise rates at all in 2019, although I'd love for that to be the case.

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You seem to be taking the Feds word at face value while simultaneously saying the market always knows more.

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Why shouldn't I? They have raised rates EVERY TIME they said they were going to raise them for the last 6 rate hikes.
I said, "I always maintain the "markets" always know more than I do." I didn't say the markets know more than the Fed.

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I’m confused by this

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I hope this un-confuses you...

I mean I typically don’t bother with links because people just attack the source but you can look up implied probabilities calculated off of FF monthly futures prices and they are indicating about 85% probability of no hikes in 2019 based on all available information.

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but a lot of what i'm hearing as well is no expectations in a fed hike in 2019 as well. In fact I heard on bloomberg radio yesterday or the day before that some companies are starting to price in a fed lowering the rate next rather than increasing as their next move.

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I sure hope that's true. But then it would mean the Fed seriously believes the economy is slowing significantly.

Or, they believe inflation is not a threat at all.

The CPI deflationary report yesterday was solely from the drop in gasoline prices in December. Core prices were up with the 12 month core CPI up 2.2% year over year.

Will the Fed lower rates if the core CPI remains above their 2.0% inflation target?

LINK

Exactly, what’s inflation gonna do if we see oil get back to $80/barrel in a hurry?

Regarding Amazon, here are the last four quarters of income before interest and tax:

3.74 billion
2.98 billion
1.93 billion
2.12 billion


Here is net income for the same time frame:

2.88 billion
2.53 billion
1.63 billion
1.86 billion

Fourth quarter income guidance from the company is 2.1 to 3.6 billion.

From CNBC:
Amazon expected $2.1 billion to $3.6 billion in fourth-quarter operating income, well below Street estimates of $3.9 billion.

If fourth quarter numbers end up showing that income is no longer increasing quarter over quarter, I would not be surprised to see amazon drop 30% or so. Remember, the market values this company at 802 billion.

What the hell do I know? Absolutely nothing. But I have a very hard time looking at the above numbers and thinking that those cash flows with reasonable growth metrics are worth 802 billion dollars.

On the flip side:

Amazon only did 3.03 billion in profit (net income) in 2017, and 2.37 billion in 2016. 2018 will end up being around 9.5 billion.

So, great. If Amazon shows a profit of 9.5 billion in 2018 and can guide on 25% earnings growth (~12 billion for 2019), that would still put Amazon at 67 times 2019 cash flows.

Here is a link I used for the numbers:

LINK

Thank you, I have edited to say "interest."

CME FF Rate Implied Probability

Hey, Russian. Here is what I was referencing last week. Right now the markets are pricing in a 2/3rd's probability of no rate hikes in 2019. Obviously this is all other things equal so it's flawed but I think it's an interesting.

Have you added to your short position now that SP has crossed 2600? Curious how the bears in the room see this. I expected the market to hang up around the 2600 level and then push through it, but that’s the bull in me.