What will happen to equity markets in next 3 months?

[Contrarian Investor]

What do you think will happen to the global equity markets in the next 3 months? Marc Faber reckons that it is likely that there will be a rally that is stronger than what most people will expect (see Marc Faber: Asset Markets May Rebound Within 3 Months).

What do you think? Vote below!

[QuickSilver]

Marc Faber was right about the crash. He'll be right about the rally too!

[ADEMAC]

Would love to see a rally, but i just don't think it will happen yet.

Ill go for Volatile but range bound. I think everyone is istting on there hands until the see everyone else move first.

Its an Honor to be
Ademac

[iconoclast]

Players in the equity market have not yet reached the point of loosing complete and utter despair and hopelessness, thus one concludes that their will be a strong rally and then a fall to newer lows.

One point I would like to make about Marc Faber's comment is if "financial institutions are sitting on huge piles of cash as they sell their assets and hoard it", there had to have been some other parties purchasing the assets that these institutions offloaded.

So it is clearly not that "there is all these huge piles of money" that is the trigger to market movement, but a change in market sentiment that will make the market move either way.

If the economic data is consistently negative, then this will provide greater rallying support to the bond market than the equity market.

Given the USFed's massive intervention, through a policy of quantitative easing, to support the bond market, I suspect that prices of corporate, agency and government paper will be rallying more than equity paper.

More and more players who were positioned correctly in the bond market and selling their paper to the USFed, might just turnaround and keep their windfall in cash, if sentiment towards economic conditions continue to be negative.

This will have the effect of sterilizing the USFed's attempt to inflate, through their quantitative easing policy, and further collapses in the equity market, which will lead us to a Japan type scenario.

[Contrarian Investor]

Players in the equity market have not yet reached the point of loosing complete and utter despair and hopelessness, thus one concludes that their will be a strong rally and then a fall to newer lows.

One point I would like to make about Marc Faber's comment is if "financial institutions are sitting on huge piles of cash as they sell their assets and hoard it", there had to have been some other parties purchasing the assets that these institutions offloaded.

So it is clearly not that "there is all these huge piles of money" that is the trigger to market movement, but a change in market sentiment that will make the market move either way.

Yes, agree with iconoclast on that. During the interview, Marc Faber was asked what he thought the trigger for the rally will be. He did not give a straight answer but gave the reasoning that we wrote on the blog post.

Our interpretation of Marc Faber is that no one knows what the trigger will be. But he reckons that given enough liquidity that is pumped into the system, it is only a matter of time before there's a positive trigger. Of course, he cautioned that if all these pumping does not work, than the outcome will be worse than the Great Depression.

[Zoo]

I voted that Faber is right: rip-yer-face off rally into early 09, and then we drop into the abyss when the US Treasuries bubble bursts and the USA faces a sovereign debt default. I give the drop into the abyss 'til April because you never know what TPTB will come up with to stave off the inevitable for just one more day.

[QuickSilver]

I voted that Faber is right: rip-yer-face off rally into early 09, and then we drop into the abyss when the US Treasuries bubble bursts and the USA faces a sovereign debt default. I give the drop into the abyss 'til April because you never know what TPTB will come up with to stave off the inevitable for just one more day.

Even Jimmy Rogers is making the same call.

[David M]

There will be both rebound and crash.
With volatility still evident in finance, automotive and construction industries I don't believe that there can be a solid extended rebound until there are indications to the 'man in the street' that the volatility has gone from the markets.
In other words we will have a bumpy ride with the stock exchange having good days and bad days but overall I believe the bad will outway the good.
At the moment there are not enough solid indicators out there that things will improve on some sort of permanent basis and we will be watching a rise in unemployment over the next 3 months which should keep the lid on any sort of strong rebound and could be a contributor to further loss of value in equities.

[Daltica]

I believe there will be an Obama rally. He'll stimulate the economy with a big electric shock. Already he is talking about some trillion dollars stimulus. Then the stock market will rally as a forward indicator.

[Butscher]

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