There are two reasons to see A Walk Among the Tombstones. One is Liam Neeson, its star who has remade himself as the go-to guy when you need a hero with an edge. The other is the fact that it’s based on a novel by Lawrence Block, a great mystery writer whose work deserves to be better known. The reviews haven’t been all that positive. RottenTomatoes.com gives it a 66% fresh, while the Wall Street Journal’s Joe Morgenstern calls it “a not-very-interesting revenge tale that takes a not-at-all-welcome turn into grisly, ugly horror.” But those that like it really like it. Grantland’s Wesley Morris says that “Tombstones is able to hit the sweet spot of any good suspense film: the pit of your stomach,” while the New York Times’ Manohla Dargis calls it “one of those rare contemporary cinematic offerings: intelligent pulp.” No, A Walk Among the Tombstones won’t lead the box office–that honor will go to the Maze Runner–but it could still pull in $16 million, Box Office Mojo says. Still, after the sparseness of recent weeks, that’s none too shabby.
Heading into this week, it looked as if investors might have to prepare for their own walk among the tombstones. The Federal Reserve, after all, was thought to be contemplating the excision of “considerable time” from its statement, while Scotland was voting on its independence in an election that was far closer than anyone thought it would be. Of course, the Fed stayed the course–even if it was slightly more hawkish–while Scotland stayed put. And that was a recipe for gains this week.
The S&P 500 rose 1.3% to 2,010.40 this week, its largest weekly gain since Aug. 22, while the Dow Jones Industrial Average advanced 1.7% to 17,279.74, a new record high and the Nasdaq Composite ticked up 0.3% to 4,579.79. The small-company Russell 2000 continued its losing ways by falling 1.2% to 1,146.92 and is now down 1.4% on the year.
Trading volume was particularly heavy today, thanks to Alibaba’s (BABA) heavily-hyped IPO. More than 270 million shares of Alibaba changed hands today, making it the most heavily traded stock today, while Yahoo! (YHOO), which owns a big chunk of the Chinese internet giant, saw 231 million shares traded, the most since Microsoft (MSFT) it would no longer buy the company back in May 2008. Overall, 8.6 billion shares changed hands today, the fourth highest volume of the year.
Citigroup’s Tobias Levkovich sees the market stuck in place until the end of the year before heading higher in 2015:
The amalgam of the different approaches yields a view of 2,200 on the S&P 500 for year-end 2015 or a roughly 10% increase from current levels. While the year-end 2014 projection remains unchanged at 2,000, as the market absorbs the impact of forthcoming Fed policy changes, earnings growth, credit conditions and valuation all support the potential for further share price gains next year. In corresponding fashion, roughly 10% appreciation in the Dow Jones Industrial Average is envisioned as well for 2015 (generating a 19,000 level on the DJIA).
Stifel’s Barry Bannister worries that the Fed is overestimating the strength of the economy:
There are the two sources of U.S. deflation risk that we believe matter today: (1) premature Fed interest rate exit, and (2) excessive dollar strength.
Some think we are "OK" and able to absorb deflationary pressure (dollar up, Fed exit). We are not OK, in our view. Despite low rates, total debt is still high regardless of low debt service, restraining borrowing, and income may also be highly elastic to rates. Housing starts are half the level they should be given asset reflation, the legacy of housing (democratization of credit) as the epicenter of the crisis. To this point, we believe rounds of QE allowed bank recap and time for some excesses to wash out, but we do not embrace a nostalgic 1990s narrative (plunging commodities, soaring P/E ratios, troubled Emerging Markets, U.S. as an island of untouched prosperity in a disinflationary boom) that some Wall Street strategists profess. We are keeping a cautious eye on breakeven inflation as it approaches 2% and are mindful of the Fed’s long and inglorious history managing its exits.
The problem today we see is latent balance sheet deflation risk, the opposite of the late 1970s embedded inflation flow/velocity problems. The Volcker Fed (1979 to 1987) had to be tighter-for longer to slay the inflation dragon, tightening in waves for three full years even after inflation peaked in Jan-1981, at great economic cost (double-dip U.S. recession, Latin American and Money Center bank debt crisis, and the 1984 failure of Continental Illinois Bank). But the worm has turned, and we now believe the Yellen Fed must be easier-for-longer to kill the deflation ogre. Since Paul Volcker's Fed was less consensus-driven and political than Janet Yellen's Fed, in our view, we interpret her on-the-fence rhetoric as succor to the blithely unaware hawks rather than a predisposition of the Fed leadership to hike too quickly.
And this coming from a guy predicting the S&P 500 will hit 2,300 by yearend.
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