Anyone still counting on a nice bounce this year from the S&P? Well, you may get one if our Fed keeps manipulating the stock market. But just keep that in mind when you invest. The S&P500 is no longer a market that is priced based on fundamentals of the component companies. Rather, it is a manipulated index, which relies on bank earnings, which are now completely manipulated by the Fed through bailouts and Diktats. Ain't Communism grand? Not so much. Central Economic Planning was proven to be a failed business model when Soviet Russia collapsed, but we're determined to try it here anyway, and despite our own history of prosperity through the regulated free markets and animal spirits. As I told zeta, this is how Democracy dies....not with a bang, but bit by bit the pillars are swept away. Free markets, Bill of Rights, leaders who don't do what they were elected to do, Corporatocracy/Fascism...what's next? I'd bet another sizeable war, maybe with Iran. That will be when the Dictator can rise under the guise of Patriotism and martial law.
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Stunner: Bank Of America Responsible For 14% Of Projected 2012 S&P500 Earnings Growth
zerohedge.com
If there is one piece of data that should make you scrap all optimistic forecasts for 2012 year end S&P price targets and EPS forecasts, it is the following chart from Morgan Stanley which shows the relative contribution of financial stocks to the change in full S&P earnings (combined they account for 26.3% of the change from the actual $883.5 billion to $970.6 billion).Specifically we are looking at Bank of America, which with a forecast surge in Earnings from ($2.5) billion to $10 billion accounts for 14.1% of the entire change in S&P earnings forecasts. And since the S&P is simply the Earnings number multiplied by some multiple, all consensus views that have 1400 as their 2012 year end forecast rely on bank of America to account for nearly 20 S&P points! The US market has now devolved to such a sad state when the most insolvent of all US banks has to carry nearly the bulk of earnings growth in 2012. At least with Apple they produce something - unfortunately in BAC's case it is only legal fees for the avalanche of endless litigation against them.
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