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Bloomberg
a minute ago
- Bloomberg
Everything's Expensive. There's Nowhere to Hide: Credit Weekly
Credit market bargain shoppers are having the hardest time finding deals in at least a generation. A relentless rally has left valuations stretched on just about all high-grade company debt globally. The difference between spreads on individual bonds and the average of the index is the lowest on record, according to data compiled by Bloomberg going back to 2009.
Yahoo
29 minutes ago
- Yahoo
'This bull market in equities has a serious problem': Strategist warns a crucial AI-stock index is sending a potential bubble signal
The AI trade may be fueling a stock-market bubble, warns Sevens Report Research's Tom Essaye. Semiconductor stocks' performance is lagging, raising concerns about the AI-driven market rally. Plus, bubbles tend to form late-cycle, Essaye said, and the US economic outlook is weakening. It's one of the biggest mysteries in markets right now: Is the AI trade driving a stock-market bubble? While earnings remain impressively strong, the potential warning signs of a bubble are there. The S&P 500 is sitting near all-time highs after a 28% rally since early April and 57% gains since ChatGPT was announced in November 2022. Meme stocks are ripping, suggesting investor sentiment is abnormally elevated. Excitement around AI has also driven up market valuations to levels consistent with prior major bubbles, like those seen in 1929 and 2000. Tom Essaye, the founder of Sevens Report whose clients include advisors at some of Wall Street's biggest firms, recently addressed the topic in a couple of client notes. "Every bubble in modern market history has been based on a narrative, whether it be the internet or real estate. Critically, that given narrative is widely perceived by the investment world to be a source of unlimited earnings growth across most market sectors," he wrote in an August 1 note. "Today, that potentially bubble-inflating theme is unquestionably AI technology." As Essaye sees it, the best way to measure the health of the AI trade is to look at how semiconductor stocks overall are behaving, as chips are the lifeblood of AI technology. One can do this using the PHLX Semiconductor Index (SOX), a group of 30 stocks, he said. Comparing the index's performance to the S&P 500 over the last couple of years shows "this bull market in equities has a serious problem," he said. The concern for Essaye is that SOX still sits below its July 2024 highs while the S&P 500 has risen by almost 14% over that time. This suggests the market's rally, which is largely being fueled by the AI narrative, could be in an unhealthy place if many AI stocks themselves are failing to keep up their momentum. "The takeaway here is that if AI remains the primary source of bullish optimism for a continued rally in the broader stock market in the months and quarters ahead, this market is in trouble and at risk of rolling over sooner than later as the SOX should still be leading the market higher like it was in 2024, not lagging considerably over the last 12 months," he wrote. "That divergence in index performance is meaningful, and if we see the SOX roll over in the weeks or months ahead and start selling off materially, the S&P 500 will almost certainly not be far behind." Here's the performance of an ETF that tracks the SOX index over the last three years: And the S&P 500's performance: Another sign of a potential bubble, and perhaps of trouble ahead for stocks, is that the US economic outlook appears to be weakening, Essaye said. Bubbles usually form late in an economic cycle, Essaye said, and a recession usually causes them to burst. Job gains over the last few months have been poor, as payrolls data released on August 1 showed, raising recession fears. Plus, continuing jobless claims are creeping up, he said. Essaye wrote in an August 8 note that "it is critical to keep close tabs on economic data right now," adding that "stretched valuations in the wake of the S&P 500's rapid ~85% trough-to-peak rally since the October 2022 lows were established leaves the broader equity market vulnerable to considerable downside in the quarters ahead, pending economic resilience." Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
29 minutes ago
- Yahoo
I'm 50 and have just $60K for retirement because I burned through my 401(k) to care for my parents. Am I too far behind?
Josh was working a job he loved, but not saving a lot. He knew he should be putting more away for retirement, but life kept getting in the way. Then his parents got sick. Don't miss Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how I'm 49 years old and have nothing saved for retirement — what should I do? Don't panic. Here are 6 of the easiest ways you can catch up (and fast) Robert Kiyosaki warns of a 'Greater Depression' coming to the US — with millions of Americans going poor. But he says these 2 'easy-money' assets will bring in 'great wealth'. How to get in now Everything he thought he would have time to plan for caught up with him, and now, he's worried he'ill never be able to retire. At 50 years old, he doesn't have a lot of time left to save. His total retirement nest egg is $60,000. When he had to quit his job to take care of his parents, it took a huge bite out of his savings. He left the job before he was fully vested, so he lost some of the employer contributions to his 401(k). He also made withdrawals from his 401(k), which came with penalties. Luckily, he owns his home and is ready to downsize, in order to lessen the burden of keeping up both an aging house and a big yard. Since the house needs some work, he thinks he would net about $400,000 if he sold it. Josh has now returned to the workforce, with a new job that brings in $40,000 a year. He wants to figure out how to maximize his savings and rebuild his retirement plan. Do I have to delay retirement? It's becoming more commonplace that Americans choose to delay retirement because they are in a situation like Josh's. According to a recent survey by F&G Annuities & Life of 2,000 Americans over 50, 23% have already chosen to delay retirement — a jump from 14% in 2024. Reasons people gave for this decision included worries about having enough retirement savings, worries about inflation and fears of a stock market downturn. The survey also found that 70% of respondents were considering or were delaying when they would leave the workforce. Another survey by Northwestern Mutual found that 51% of respondents said it's somewhat or very likely that their retirement savings could run out. When 4,500 Americans over 18 were asked how much they thought they needed to save to retire, the 'magic number' was $1.26 million. But for those who have begun saving, 25% say they have a year or less of their annual salary in savings. How much does the average American actually have saved? The most recent data, from the 2022 Survey of Consumer Finances, found the median retirement savings of Americans to be $87,000. A far cry from $1.26 million, but close to where Josh currently finds himself. Still, his savings are low for his age. According to the Northwestern survey, 52% of gen-Xers say they have three times their current annual income or less saved. Stay in the know. Join 200,000+ readers and get the best of Moneywise sent straight to your inbox every week for free. How can I reach my retirement goals? Josh's first step to grow his savings should be to contribute the maximum amount that his new employer will match for his 401(k). It's always best to take advantage of the full matching amount from your employer, since it's essentially free money. Since he is over 50, Josh can also make catch-up contributions, which he should also aim to make. If he decides to sell his house and downsize, he could use some of the profits toward catch-up contributions. Since Josh thinks his aging house will end up costing more as time passes, he should strongly consider moving to a smaller home with less maintenance issues. He should also develop a budget with aggressive savings built in, trimming down any non-essentials that he can. There is hope that Josh could one day retire, but to maximize both the amount he's able to earn, and the Social Security benefits that he will receive when he does retire, he should strongly consider delaying starting Social Security for as long as possible. Since Josh was born after 1960, the full retirement age for him is 67. However, if he waited until 70 to start his benefits, he would receive 24% more a month, which could go a long way to ensure his retirement is well funded. What to read next Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan 'works every single time' to kill debt, get rich in America — and that 'anyone' can do it Here are 5 simple ways to grow rich with real estate if you don't want to play landlord. And you can even start with as little as $10 Rich, young Americans are ditching the stormy stock market — here are the alternative assets they're banking on instead Here are 5 'must have' items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you? This article provides information only and should not be construed as advice. It is provided without warranty of any kind. Sign in to access your portfolio
