CNBC/Matthew J. Belvedere
Cramer calls this stock market environment ‘the most speculative’ he’s ever seen
CNBC’s Jim Cramer said Tuesday that some of the stock gains in the market are “insane,” with investors recently buying certain names from Tesla to Royal Caribbean seemingly without regard for fundamentals or the state of the coronavirus pandemic and holding onto them.
“Where are the profit-takers” after these dizzying moves higher? the “Mad Money” host asked.
Cramer called the current environment “the most speculative market I’ve ever seen,” hitting on a recent theme in which he’s been dumbfounded by the kinds of moves in so-called Robinhood stocks, names being gobbled up on the online trading platform favored by younger investors.
“You can’t lose in that market,” he said, adding “it’s like a slot machine” that always pays out. “I’ve not seen this in my career,” stressed Cramer, who came to Wall Street in the mid-1980s after joining Goldman Sachs and later became a hedge fund manager before becoming a financial journalist.
Cramer questioned how this type of buying can continue, pointing out that in the past such speculation has been met with a big sell-off. However, he said that such a downturn has not happened yet despite coronavirus cases in the U.S. and around the world hitting record after record, which could threaten the nascent economic recovery from the depths of the pandemic in the spring.
Fox Business/Megan Henney
Millions of Americans face eviction at year’s end as coronavirus cases surge
The U.S. is facing a tidal wave of evictions at the end of the year unless the federal government, in the eleventh hour, extends key pandemic-related protections for millions of renters and homeowners.
More than 5.8 million adults say they are somewhat to very likely to face eviction or foreclosure over the course of the next two months, according to a U.S. Census Bureau survey completed Nov. 9. That represents about one-third of the 17.9 million Americans who were behind on their rent or mortgage payments last month.
An order from the Centers for Disease Control and Prevention temporarily freezing evictions nationwide is slated to expire on Dec. 31 — the same time that other key federal protections are set to lapse, including two jobless aid programs that could leave an estimated 12 million workers with no income.
And when the pandemic first took hold in the U.S., Congress passed the $2.2 trillion CARES Act, which included an eviction freeze that protected about 12 million renters in federally backed properties. That moratorium expired at the end of July.
Making matters worse for renters is that many entered the virus-induced crisis on already shaky ground. According to research from Harvard’s Joint Center for Housing Studies, about half of all American renters were cost-burdened before the crisis, meaning that more than one-third of their income went toward rent.
There are some 110 million Americans living in rental households; up to 23 million renters – or 20% – are at risk of eviction when the moratorium expires, according to an analysis by the COVID-19 Eviction Defense Project.
Even as the U.S. economy has started to gradually recover from the crisis – it’s so far recovered about half of the 22 million jobs lost – data indicates that renters are still struggling to make their monthly payments.
Dwindling liquidity set to remain a ‘concern’ for stocks as long path to normality lies ahead for economy
With a long road to normality for the U.S. economy still ahead, investors may need to turn their attention again to the scarcity of liquidity in financial markets.
The link between liquidity and volatility has become tighter, creating feedback loops that can see elevated uncertainty prompt liquidity providers to rein in trading and thus exacerbate market turbulence, quant analysts at Société Générale say.
That could mean investors basking in the euphoria of positive vaccine developments are sitting in a more precarious situation than they might think.
According to analysis by Sandrine Ungari, head of cross-asset quantitative research at Société Générale, in a Tuesday note, liquidity remains at the bottom of measured levels since 2014, and has closely tracked levels of the ups and downs of the market.
Société Générale measured liquidity by looking at the average difference between the price offered and the price bid among orders to buy and sell the S&P 500 index at the best available price.
Yet amid the buoyant mood in risk assets, many have overlooked how this lack of liquidity could prove troublesome in future market selloffs.
The CBOE Volatility IndexVIX, which measures the implied volatility for the S&P 500 over the coming 30 days, pushed above 30 in the run-up to the U.S. presidential election on Nov 3, but has since steadily declined.
Muted volatility has accompanied double-digit equity gains. The S&P 500 SPX, +1.61% has advanced 10.7% in November, while the Dow DJIA, +1.53% has risen 13% over the same stretch.
But months of economic uncertainty still lie ahead until a viable COVID-19 vaccine is widely distributed and this means “a path to normality is probably going to be a long one, with bumps along the way,” Société Générale’s Ungari said.