Aug 19 - After the Dow's worst week in more than a year- a look at the key worries for the U.S. stock market. Bobbi Rebell reports.
Last week the Dow had its largest weekly drop in more than a year. Here are three things investors should worry about when it comes to the bull market: Number one: Stock valuations playing catch up to ho hum corporate earnings. BMO Capital Markets Brian Belski: SOUNDBITE: BRIAN BELSKI, CHIEF INVESTMENT STRATEGIST, BMO CAPITAL MARKETS (ENGLISH) SAYING: "We think it could be a cloud because we do think prices are ahead of where earnings should be. Remember economic growth has been lackluster coming out of this recovery and I think people are missing that". Number two: Bargains that really aren't: SOUNDBITE: BRIAN BELSKI, CHIEF INVESTMENT STRATEGIST, BMO CAPITAL MARKETS (ENGLISH) SAYING: "The other issue that we have heard recently is buying an asset because it's cheap. Buying Europe because it's value . Well, valuation is an important determinant with respect to investing but it's not the only thing you should be looking at. So sometimes we think people focus on one or two attributes only when they ought to be looking at the whole mosaic of investing." And finally- The ticking clock of the Fed winding down its bond buying program. JP Morgan Chase private client Chief Economist Anthony Chan: SOUNDBITE: ANTHONY CHAN, CHIEF ECONOMIST, CHASE PRIVATE CLIENT (ENGLISH) SAYING: "How large is the tapering going to be. The market is expecting roughly $20 billion. My suspicion is that if the nature of the debate and the data between now and the FOMC meeting in particular the employment report that comes out in early September is not as strong, the central bank may opt to move that number a little lower. But not necessarily postpone the act of tapering but rather modify it based on current economic conditions." More clues on tapering will come later in the week when the Fed releases the minutes from its July meeting.