Home https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ Business https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ Here’s the undesirable surprise that equity investors expect next year, says this money manager

Here’s the undesirable surprise that equity investors expect next year, says this money manager

While markets may have appreciated much of this optimism, there are unlikely to be major market downturns for the rest of the year, said Thomas H. Key Jr., president and CEO of Stock Traders Daily and portfolio manager at Equity Logic.

But that comes in 2021, he tells MarketWatch, in ours call of the day.

The big reason is that Key believes that analysts’ expectations for earnings per share by 2021 for the Dow Jones Industrial Average DJIA,
+ 1.59%
are too high. These DJIA EPS growth forecasts are at 26% compared to 32% recently due to blockages within the COVID-1

9 autumn wave. As those expectations decrease, as he expects them to, the risk of valuation increases, he says.

Stock traders daily

“Assuming the Dow stays exactly where it is at the moment, and profits increase by 32% for the Dow in 2021. At the end of 2021, price gains multiple for the DJIA will be higher than at any other time. after the credit crisis, which means it will be extremely expensive, “he said. The market could see a 25% drop in these circumstances, he said.

“And at the end of next year, you will see material gains in the market, although everything will return to normal,” Kee said after COVID-19. “When it comes, it will be a surprise for most investors who expect everything to look extremely good next year. The truth is, this year should look worse, not because there were so many incentives. “

By next year, investors will be able to cope with rough economic criteria and central banks will reduce incentives (from the beginning to the middle of the year).

But he says Wall Street bankers will support the market this year to ensure that these bonuses arrive at the end – a weak third quarter reduced them, he said.

As for how to play this impending stock decline, Kee is sticking to a strategy he recommended to this column in May – revolving between the S&P 500 ETF SPY,
+ 1.24%
and cash. Keep going, he says, until you see signs that investors are entering an overvalued market.

The action of the stock market will be of the greatest importance, he says. “I watch reversal signals and they come in all different shapes and sizes,” he says. One possible signal: markets are breaking above a high level of resistance and then coming back. That’s one of many, Kee says.

The markets

Dow YM00,
and S&P 500 ES00 futures,
have decreased while the Nasdaq futures NQ00,
+ 0.21%
crawl up. European shares SXXP,
are lower. Nikkei NIK,
+ 0.41%
briefly reached a 29-year high, while China stocked 000300,
he slipped. GBPUSD pounds,
+ 0.43%
is ready for a report on a possible trade deal between the European Union and the United Kingdom next week.

Read: Here’s how bad pain from commercial real estate can affect banks and other lenders

The buzzing

Tesla TSLA,
the stock rose 12% in the preliminary market on news that the electric carmaker will join the S&P 500 next month. And the global online rental market, Airbnb, announced an initial public offering worth $ 1 billion.

Amazon e-commerce retailer AMZN,
+ 0.07%
has launched an online pharmacy store that includes discounts for Prime members.

Home Improvement Group Home Depot HD,
+ 0.86%
reported better-than-expected revenues and revenues. Walmart WMT shares,
+ 1.26%
rise after the trader exceeds revenue forecasts. Profits from Kohl’s KSS,
+ 7.79%
yet to come.

Retail sales and import prices are forthcoming, followed by industrial production, business inventories and the home builders’ index. Federal Reserve Deputy Chairman Richard Clarida said late Monday that the economy is likely to need additional monetary and fiscal support.

Georgia’s secretary of state told the Washington Post that senior Republicans, including Sen. Lindsey Graham, were pressuring him to drop legitimately absent presidential ballots. Meanwhile, the state’s vote count has so far revealed 2,600 unlisted ballots, mostly for President Donald Trump.

Hurricane Iota erupted in Central America just days after Eta.

The CEO of Take-Two Interactive TTWO,
+ 0.34%
talks about next-generation video games and more at Barron’s Investing in Tech on Thursday at 1 p.m. Register here.

Random readings

Mute relatives on Twitter TWTR,
and #NewThanksgivingTraditions:

NASA’s space station welcomes new members of the SpaceX crew:

The French radio station accidentally published obituaries of living people.

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