The stock market rally so far this year has been painful for market bears. But there are some that argue this can’t go on much further.
In an interview with Fox Business, Blackstone Vice Chairman Byron Wien says it’s “unrealistic” to expect the rally to carry on much longer.
“The market has already given you a full-year’s performance and we’re only at the beginning of June. It’s unrealistic to think the market could continue to go up at the rate it’s gone up so far this year. There’s bound to be a correction.
You have earnings problems, you have the economy slowing, you have all the economies around the world slowing, demand for U.S. products are slowing, so my view is it’s time to be cautious.”
Wien also pointed out some of the “fissures” in the market:
“Earnings were up 3% in the first quarter, S&P 500 operating earnings. They’re going to be up 5% in the second quarter. Analysts are projecting them to be up 11% in the third quarter and 15% in the fourth. And I’m suspicious you won’t see double digit gains in the third and fourth quarter. I think it’ll be below that and earnings disappointment will be the first of the fissures that you’re referring to.
“…A significant portion of those asset purchases go into financial assets and that’s happening here too. And that’s probably the second of the fissures. There’s no question that the Fed is going to slowdown at some point. If they did $60 billion a month, instead of $85 billions that’s still a lot but the market might interpret that as something negative.”
Wien also said a 10% correction is possible, but it is unlikely to be that great of a decline. He also we’ve seen lows in bond yields and investors will lose money in the bond market across all maturities.
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