The Stock Market's Tone Is Changing, Some Indicators Pointing To A Year-End Selloff. GE The Unravel that has WallStreet Shocked

Shiller on Stock Investors: ‘People Don’t Expect the Moon Anymore’
Robert Shiller, professor of economics at Yale University, discusses investor sentiment, valuations and more with Eric Chemi.

Robert Shiller on investor sentiment & the market: ‘People don’t expect the moon anymore’ from CNBC.

The stock market’s tone is changing, with some indicators pointing to a year-end selloff

  • The S&P 500 and the small-cap Russell 2000 have diverged about 4 percentage points.
  • Two high-yield exchange traded funds that had been doing well this year are both down more than 1 percent this month.
  • There are some signs the market advance is becoming more selective.

Markets change tone as progress on tax reform slows from CNBC.
Another day, another down open. There’s a different tone to the markets in the last week or so.
It started last Tuesday, when an initial rally faded into a hard sell-off mid-morning. The next five trading sessions generally opened down.
Peter Tchir of Academy Securities, checked off a short list of concerns. There is progress on tax reform “but the reality is it’s not going to be as great as everyone hoped,” he said. There are questions about what the flatter yield curve means. And the recent arrests of high-ranking Saudis in an anti-corruption initiative created uncertainty in the last week and a half.

“Buyers have become a little more discriminating, it’s a little more of a seller’s market,” Tchir said.

One of the World’s Biggest Funds Is Slashing Its Exposure to Stocks

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  • Largest U.S. pension may reduce returns as well as volatility
  • Higher contributions could irk agencies already ‘screaming’
The California Public Employees’ Retirement System, the largest U.S. pension fund, is considering more than doubling its bond allocation to reduce risk and volatility as the stock bull market approaches nine years.
Calpers is looking at a menu of options for its fixed-income target ranging from the current 19 percent to as much as 44 percent, according to a presentation for a board workshop in Sacramento coming up Monday. Equities could be cut to as little as 34 percent from 50 percent. Stocks were the best-performing asset class in fiscal 2017, returning almost 20 percent.
“The markets have had a pretty good run and it’s possible Calpers staff is thinking this might be a good time to lock in some of the gains,” Keith Brainard, research director for the National Association of State Retirement Administrators, said in a phone interview.
Calpers oversaw $342.5 billion in assets as of Nov. 10, up about 13 percent this calendar year on a combination of returns and contributions from employees and taxpayers. The fund lost money in past bear markets, including about 25 percent in the 12 months through June 2009 and 7 percent in fiscal 2001.
Bond yields remain at low levels because of persistent weak inflation, central bank easy money policies and global investors chasing income. Raising the allocation would reduce the fund’s discount rate, or average expected return, to 6.5 percent from the 7 percent annual target adopted last year. A lower target would probably require bigger contributions from taxpayers and public agencies to cover pension obligations, a shift that board member JJ Jelincic said he would oppose.
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