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Art Cashin: Dalio May Be Right in Call for Market's Blow-off Top

Wednesday, 24 January 2018 05:36 PM

Investors who had waiting for a stock pullback are finally giving up and are buying anyway, closely followed trader Art Cashin told business channel CNBC.

The Dow pushed to a fresh all-time high Wednesday, while the S&P 500 and Nasdaq slid from records amid weakness in airline and computer chip shares. The Dow Jones Industrial Average rose 0.2 percent to close at 26,252.12, surpassing the record set Monday. The Nasdaq Composite Index dropped 0.6 percent to 7,415.06, while the broad-based S&P 500 lost 0.1 percent at 2,837.54, after both posted multiple record days.

Investors "late to the party are beginning to say, 'wait a minute, this train is pulling out. I can't wait much longer,'" said Cashin, UBS director of floor operations at the New York Stock Exchange.

"Everybody's been waiting to buy the dip," Cashin said, but now investors are saying, "'I may not get that dip.'" 

Cashin said Bridgewater Associates founder Ray Dalio may be right in his predictiong that investors may see "a market blowoff" rally fueled by cash entering the market.

"[Dalio] talked about ... people who haven't gotten in yet and I think you're seeing a little bit of that here," Cashin said. "It wouldn't take much to turn these sparks into a real blaze."

Nobel Prize-winning economist Robert Shiller warns savvy investors that the seemingly endless Trump bull-run stock market rally really doesn’t need much to stop it dead in its tracks.

"People ask 'well what will trigger it (a market correction)?' But it doesn't need a trigger, it's the dynamics of bubbles inherently makes them come to an end eventually," the Yale University economics professor told CNBC.

Markets could "absolutely suddenly turn," said Shiller, who was awarded the Nobel Prize in Economic Sciences with Eugene Fama and Lars Peter Hansen in 2013.

He said he believed the bull market was hard to attribute totally to the U.S. political factors.

"The strong bull market in the U.S. is often attributed to the situation in the U.S. but it's not unique to the U.S. anyway, so it's hard to know what the world story is that's driving markets up at this time, I think it's more subtle than we recognize," said Shiller, who developed the cyclically adjusted price-earnings (CAPE) ratio market valuation measure, which is calculated using price divided by the index's average historical 10-year earnings, adjusted for inflation.

He said it was hard to define scientifically what could trigger markets to fall into a correction. A "correction" is commonly defined as a temporary drop of at least 10 percent adjust for an overvaluation.

"Something will be invented to explain it once it happens. If you go back to the most famous correction in 1929 there was no (one event) people look back and try to find something but it sounds contrived," said Shiller, who also helped develop the widely-followed S&P/Case-Shiller Home Price Indices.

To be sure, Wall Street’s main indexes were higher Tuesday as upbeat results from Netflix, Travelers outweighed concerns of the potential impact of President Donald Trump’s decision to impose steep import tariffs.

South Korea and China protested against Trump’s move to impose import tariffs on washing machines and solar panels, with Seoul saying it would respond to the spread of protectionist measures.

“We don’t know if this is the beginning of something larger or if it’s something that will escalate into a trade war,” Art Hogan, chief market strategist at B. Riley FBR in Boston, told Reuters.

Hogan also said it sparked fears about U.S. walking away from NAFTA.

NAFTA’s future hangs in the balance this week as negotiators from the United States, Canada and Mexico try to settle major differences over revamping a pact that Trump has threatened to abandon.

For his part, Trump says the mainstream liberal media twists the facts and distorts reality.

"Do you notice the Fake News Mainstream Media never likes covering the great and record setting economic news, but rather talks about anything negative or that can be turned into the negative. The Russian Collusion Hoax is dead, except as it pertains to the Dems. Public gets it!" the president recently tweeted.

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Investors who had waiting for a stock pullback are finally giving up and are buying anyway, closely followed trader Art Cashin told business channel CNBC.The Dow pushed to a fresh all-time high Wednesday, while the S&P 500 and Nasdaq slid from records amid weakness in...
cashin, dalio, cash, market
Wednesday, 24 January 2018 05:36 PM
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