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Oct. 28, 2019, 1:08 p.m. EDT

‘Carnage awaits’ investors, if this chart is anything to go by

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By Shawn Langlois, MarketWatch


Everett
It's almost Halloween and our chart of the day is pretty scary.

The doom-and-gloom crew has been drawing lines between the dot-com bubble and the current market climate for a while now. With stocks banging out record highs on a regular basis, those forecasting a collapse can’t catch a break.

But hey, it’s almost Halloween — maybe it’s their time to shine.

In that spirit, noted bear Albert Edwards, global strategist at Société Générale, earns our chart of the day with this graph showing how earnings have diverged from the S&P 500 to a degree not seen since, yes, 2000.

What does this mean? “Carnage awaits,” Edwards wrote in a note to clients over the weekend. He warned that surging tech stocks have disconnected from the reality of earnings at a problematic time.

“The unfolding profits recession will expose the ‘growth’ impostors and they will collapse, as they are on the wrong ‘growth’ [price-to-earnings] valuations with the wrong [earnings per share] projections,” he said. “Just like in 2001, investors will not wait to distinguish true ‘growth’ stocks from the impostors. Investors will slam the whole sector and work it out later.”

There is no “carnage” yet, as investors appear to be in the buying mood.

The market

The Dow /zigman2/quotes/210598065/realtime DJIA +1.22%  , S&P /zigman2/quotes/210599714/realtime SPX +0.91% and Nasdaq /zigman2/quotes/210598365/realtime COMP +1.00% are all higher. European stocks /zigman2/quotes/210599654/delayed XX:SXXP +1.16% also posted gains, while Asian stocks /zigman2/quotes/211618636/realtime XX:ADOW +0.42% were boosted by comments on Friday that the U.S. and China were close to reaching a “phase one” trade deal.

Bitcoin /zigman2/quotes/31322028/realtime BTCUSD -0.86% exploded over the weekend, breaking through the 10,000 level before pulling back, trading just under $9,400 on Monday

The buzz

Shares of Tiffany /zigman2/quotes/209249105/composite TIF 0.00% are on fire, rallying by about 30% after Paris-based luxury goods company LVMH /zigman2/quotes/201350549/delayed FR:MC +1.87% said it’s in talks over a potential takeover. AT&T /zigman2/quotes/203165245/composite T +0.03% is up after the company it outlined steps it will take to placate activist investor Elliott Management. Spotify /zigman2/quotes/207488629/composite SPOT +1.03% is surging after the music service announced its CFO will retire and above-expectations user numbers.

President Donald Trump said on Sunday that a U.S. military raid in Syria led to the death of Abu Bakr al-Baghdadi, the shadowy leader of the Islamic State group. The E.U. granted a three-month extension to the U.K. to Brexit.

There’s a state of emergency in California after officials on Sunday ordered nearly 200,000 people to evacuate due to multiple wildfires. Power company PG&E /zigman2/quotes/202583141/composite PCG -1.33% cut electricity to millions of residents to prevent more areas from igniting.

/zigman2/quotes/210598065/realtime
US : Dow Jones Global
28,015.06
+337.27 +1.22%
Volume: 224.83M
Dec. 6, 2019 5:07p
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/zigman2/quotes/210599714/realtime
US : S&P US
3,145.91
+28.48 +0.91%
Volume: 0.00
Dec. 6, 2019 5:07p
loading...
/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
8,656.53
+85.83 +1.00%
Volume: 1.87M
Dec. 6, 2019 5:16p
loading...
/zigman2/quotes/210599654/delayed
XX : STOXX
407.35
+4.69 +1.16%
Volume: 0.00
Dec. 6, 2019 5:50p
loading...
/zigman2/quotes/211618636/realtime
XX : Dow Jones Indices
3,356.84
+13.96 +0.42%
Volume: 0.00
Dec. 9, 2019 2:51a
loading...
/zigman2/quotes/31322028/realtime
US : CoinDesk
7,499.19
-64.86 -0.86%
Volume: 0.00
Dec. 9, 2019 2:51a
loading...
/zigman2/quotes/209249105/composite
US : U.S.: NYSE
$ 133.55
0.00 0.00%
Volume: 3.63M
Dec. 6, 2019 6:30p
P/E Ratio
29.88
Dividend Yield
1.74%
Market Cap
$16.02 billion
Rev. per Employee
$312,824
loading...
/zigman2/quotes/201350549/delayed
FR : France: Euronext Paris
401.35
+7.35 +1.87%
Volume: 475,552
Dec. 9, 2019 3:01a
P/E Ratio
30.55
Dividend Yield
1.54%
Market Cap
€202.03 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/203165245/composite
US : U.S.: NYSE
$ 38.20
+0.01 +0.03%
Volume: 22.61M
Dec. 6, 2019 6:30p
P/E Ratio
17.10
Dividend Yield
5.34%
Market Cap
$279.05 billion
Rev. per Employee
$637,332
loading...
/zigman2/quotes/207488629/composite
US : U.S.: NYSE
$ 148.09
+1.51 +1.03%
Volume: 724,230
Dec. 6, 2019 6:30p
P/E Ratio
88.02
Dividend Yield
N/A
Market Cap
$26.73 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/202583141/composite
US : U.S.: NYSE
$ 9.65
-0.13 -1.33%
Volume: 13.56M
Dec. 6, 2019 6:30p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$5.11 billion
Rev. per Employee
$698,292
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