The Stock Market Looks Overvalued

In this latest speech, the Federal Reserve Chairman Jerome Powell told members of Congress that this year the central bank is going to stop reducing its $4 trillion balance.

Investors think this process is inconsistent with the current pause in interest rates rising.

Any hints of a possible rate cut will be perceived favorably by the market.

In the past two months, the US stock market has demonstrated significant growth.

Now investors should wait for a trend reversal.

After the recent take-off, the market looks overvalued, especially given the beginning decrease in profit forecasts.

Besides, we see a sharp discrepancy between the real policy of the Fed and investors’ expectations.

They do not take into account the increase in interest rates in the next 12 months but even put rate cuts on the two-year horizon.

The US economy is slowing down, which creates prerequisites for a noticeable and rapid increase in volatility, as well as a decrease in stock indices.

The likelihood of a steady bearish market is still low. In our opinion, the indices will simply go into a lower range.

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Oracle Report Will Show The Further Direction Of Stock Market Movement

In February, the American software and server hardware developer Oracle announced the expansion of its share buyback program by $12 billion.

We consider Oracle shares as undervalued.

In our opinion, the current company’s strong management team focused on providing profit for shareholders.

Oracle is a leading participant in the database software market and it has significant cloud capabilities.

However, revenue growth is absent due to prolonged price pressure.

Market analysts welcome Oracle’s focus on cloud computing.

They see great opportunities for Oracle to grow in the cloud computing segment, considering that this is the path to success for the entire company.

For 2019, analysts predict a decline in revenue by 1%.

However, in 2020 and 2021, Oracle’s revenue will grow by 3% per year.

Experts expect the US company will proceed with acquisitions to increase revenue growth and market share.

From January 2012 to February 2014, Oracle allocated approximately $6 billion for the purchase of several cloud software companies.

In November 2016, the company acquired cloud software leader NetSuite for $9 billion.

For three years, from 2013 to 2016, Oracle annually redeemed shares from the market of about $8 to $11 billion.

Then in 2017, it sharply reduced the value of share repurchases to $4 billion.

In September 2018, Oracle expanded its share repurchase program by $12 billion, and in February 2019 – by $12 billion again.

Investors usually respond positively to an increase in stock repurchases.

-J

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