Market pros playing chicken with corporate valuations

It’s one thing to have the financial-focused YouTube channels screaming about the pending stock market crash in between hawking gold and silver as the way to survive the coming carnage.

However, over the last two weeks or so, some of Wall Street money pros who are running billions in assets have began to speak of the equity bubble as prices get too lofty and there needs to be a 10% correction.

Market technicians always look for corrections, so that markets can build a bottom to then move higher. What these billionaires are saying is a bit more emotional than technical.

Guggenheim Partner’s Scott Minerd, who has $240 billion in assets under management, sees perhaps a mid-teen percentage move lower as the Trump trade loses its steam mired in the swamp of Congress.

Paul Tudor Jones, who runs the $10 billion Tudor Investment hedge fund, is looking at the near-decade long  years of low-interest rates have pushed stock valuations to a level not seen since the Internet bubble in 2000, when the Nasdaq tumbled 75 percent over the next two years.

This week BlackRock’s Larry Fink came out this week and look at the fundamentals and said he could see a correction over the summer if corporate earnings don’t measure up for Q2.

Baupost Group’s Seth Klarman, with $30 billion AUM , said in an investor letter that insider trading is ramping up as corporate executives have been ramping up their selling of company sales saying  that’s “a sign that those who know their companies the best, believe valuations have become full or excessive.”

As I stated, while the White House was out in force Thursday with both Gary Cohn and Treasury chief Steve Mnuchin said a tax plan will be in place soon. I predict soon will be the beginning of 2018. And the $1 trillion infrastructure rebuilding plan is going nowhere in this Congress as well.

The White House can jawbone stocks up over 100 Dow points now, but some of Trump’s campaign rhetoric need to come to fruition soon or the market  will turn tail and have a significant move lower.


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