Stock Markets
Morgan Stanley: bear market rally to continue
One of Wall Street’s best-known bears, Michael Wilson, thinks the S&P 500 will rise another 7% before turning down, so the bear market rally will continue for now, writes Market Watch.
After the Dow Jones, S&P 500 and Nasdaq Composite joined their strongest weekly gains since at least May last Friday, Wilson, who is chief strategist and head of U.S. equity markets at Morgan Stanley (NYSE:MS), told clients that there could be another 5% to 7% before the downward trajectory of U.S. stocks resumes during the latest bear market recovery.
Wilson has held a bearish view of the stock market for about 2 years and correctly predicted a sell-off this year.
Wilson explained in a research note sent out to clients on Monday that a pullback in the 38-50% drop in the stock market this year “would not seem like something unnatural, not consistent with the previous bear market rally.”
While growth concerns have triggered a sell-off in commodities and lowered inflation expectations, the fact that the U.S. economy is already slowing and heading toward recession means that any market rally is likely to be short-lived, and U.S. stocks are likely to eventually fall.
Wilson mentioned in the note that the bear market is not over yet, although it may appear otherwise in the next few weeks as the market takes the rate cut as a sign that the Fed can still manage a “soft landing” and prevent a meaningful revision to earnings forecasts.
U.S. stocks rose last week as investors now hope the slowing economy and falling commodity prices may inspire the Fed to raise interest rates less sharply. Federal funds futures, a derivative used by investors to bet on the pace of the Fed’s monetary policy changes, estimate with a high probability that the Fed will be forced to start cutting interest rates again as soon as next summer.
They also consider the lower peak in the federal funds rate: it will peak around 3.5% at the end of 2022 instead of 3.75% just a couple of weeks ago. Wilson also pointed out the drop in Treasury yields: the 10-year Treasury bond yield went from 3.230% to a low of 3.07% on Friday before rebonding again on Monday.
Wilson expects the S&P 500 index to fall to around 3,400 points if the U.S. Federal Reserve manages to get a “soft landing” for the economy — which Fed Chairman Jerome Powell said last week would be “a very difficult thing to do.”
Wilson expects that if the U.S. economy plunges into recession, the S&P 500 index will fall to around 3,000 points. In any case, Wilson believes that U.S. stocks are still highly valued because the risk premium — that is, the measure of compensation that investors receive for the extra risk of owning stocks instead of bonds — remains about 300 basis points higher than the 10-year Treasury bond yield, which is considered a “risk-free rate.”
(Reuters) – U.S. President-elect Donald Trump on Saturday said he would “most likely” give TikTok a 90-day reprieve from a potential ban in the United States after he takes office on Monday.
“The 90-day extension is something that will be most likely done, because it’s appropriate,” he told NBC in an interview. “If I decide to do that, I’ll probably announce it on Monday.”
By Alexander Cornwell and Nidal al-Mughrabi
TEL AVIV/CAIRO (Reuters) -Israel approved a ceasefire deal with Palestinian militant group Hamas on Saturday that involves releasing hostages in the Gaza Strip, and Israeli forces carried out new attacks in the enclave before the agreement’s scheduled start on Sunday.
The agreement is set to halt a 15-month-old war between Israel and Gaza’s rulers Hamas that has decimated the Gaza Strip, killed tens of thousands of Palestinians and destabilised the Middle East.
The war was triggered by Hamas’ Oct. 7, 2023 attack on southern Israel in which 1,200 people were killed and more than 250 taken hostage, according to Israeli tallies. More than 400 Israeli soldiers have been killed in combat in Gaza since.
Early on Saturday, after meeting for more than six hours, the Israeli cabinet ratified the ceasefire deal which is meant to stop fighting and see the release of dozens of hostages held by Hamas in return for scores of Palestinians jailed in Israel.
Later, Netanyahu said Hamas had yet to provide the list of hostages who will be released and that Israel would not proceed without it.
In Gaza, Israeli warplanes have kept up attacks since the deal was agreed, and pounded the territory on Saturday.
Israeli tanks shelled the Zeitoun neighbourhood of Gaza City and airstrikes hit central and southern Gaza, residents said. Medics in Gaza said five people were killed in an airstrike that hit a tent in the Mawasi area, west of the city of Khan Younis.
The Israeli military said that since Friday it had struck Hamas and Islamic Jihad fighters who were among 50 “terror targets” it hit across the Gaza Strip.
At least 123 Palestinians have been killed in Israeli strikes since the ceasefire deal was announced on Wednesday, the Palestinian Civil Emergency Service said.
Nearly 47,000 have been killed since the start of the war, according to the Palestinian health ministry.
FIRST HOSTAGES TO BE FREED SUNDAY
In Tel Aviv, a large clock at the so-called Hostage Square by Israel’s defence headquarters was still counting the days, hours, minutes and seconds since the hostages were taken. Protests for their release have been held there regularly since.
Standing by the clock, Orly, a lawyer, said that although she was happy that an agreement had been reached, it had taken too long. “It should have been more than a year ago,” she said.
Israelis must keep pressure up on the government until all 98 hostages are back home, she said.
The Gaza ceasefire will come into effect at 0630 GMT on Sunday, the Qatari foreign ministry spokesman posted on X. The White House expects three female hostages to be released to Israel in the afternoon through the Red Cross.
Under the deal, the three-stage ceasefire starts with an initial six-week phase when hostages held by Hamas will be exchanged for prisoners and detainees jailed in Israel.
Thirty-three of the 98 remaining Israeli hostages, including women, children, men over 50 and ill and wounded captives, are to be freed in this phase. In return, Israel will release almost 2,000 Palestinians from its jails.
They include 737 male, female and teen-aged prisoners, some of whom are members of militant groups convicted of attacks that killed dozens of Israelis, as well as hundreds of Palestinians from Gaza in detention since the start of the war.
Israel’s Justice Ministry published their details early on Saturday, along with the ceasefire agreement, which said 30 Palestinian prisoners would be released for each female hostage on Sunday.
After Sunday’s hostage release, lead U.S. negotiator Brett McGurk said, the accord calls for four more female hostages to be freed after seven days, followed by the release of three further hostages every seven days thereafter.
SHOCKWAVES
With the accord opposed by some Israeli cabinet hard-liners, media reports said 24 ministers in Netanyahu’s coalition government voted in favour of the deal while eight opposed it. On of them was far-right police minister Itamar Ben-Gvir, who said his party would had in its resignation letters on Sunday.
The Gaza conflict caused shockwaves across the region, triggering a war with the Lebanese Hezbollah movement and bringing Israel into direct conflict with Iran for the first time.
The Yemeni Houthis, also backed by Iran, have since the start of the Gaza war carried out hundreds of attacks on what they say are Israeli-linked cargo ships travelling via the Red Sea and fired missiles at Israel, which has retaliated with airstrikes in Yemen.
At least two missiles were fired from Yemen on Saturday, the Israeli military said, setting off air raid sirens in Tel Aviv, Jerusalem and the southern resort town of Eilat before they were intercepted.
In Tel Aviv, a Palestinian man stabbed and wounded one person, police said, before he was shot by a passerby. His condition was not immediately clear.
World – U.S. President-Elect Donald Trump is set to sign a crypto executive order that will set the tone for the regulatory landscape of the industry. Crypto assets are predicted to pump, ushering in an altcoin season. For this reason, whales are betting big on PropiChain (PCHAIN) and its AI features.
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The Trump trade, which began in November, is expected to continue post-inauguration. Analysts claim that the AI altcoin season is around the corner.
Trump Sparks Optimism in the Crypto Sector
Trump is preparing to issue a crypto-related executive order early in his second term. Sources suggest this order is just the beginning of several to come. It aims to bring more structure and clarity to crypto regulations.
Trump is expected to create a presidential crypto council with about 20 key industry leaders. Additionally, the Trump executive order could eliminate a rule that prohibits American banks from holding crypto.
This has brought fresh optimism into the market. K33 predicted that the Trump trade would continue after the inauguration. If Trump keeps his crypto promises, digital assets could be primed for new all-time highs.
PCHAIN: Here is Why the AI Altcoin is Set to Skyrocket
The stage is set for the crypto industry to make 2025 a year for the books. With Trump expected to sign a pro-crypto executive order, investors are already positioning for good days ahead.
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Trump to Kickstart an AI Altcoin Season
Trump is set to deliver on his campaign to enact favorable crypto regulations in his coming administration. This is good for the industry as it has suffered from a lack of clear regulations.
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