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August, 2016 Archives

Daily Recap

Oil prices and interest rates: more often than not, one or both of those is all the market cares about on a given day. Today it was the price of oil, down 3% ($1.60) on news of higher inventories, and dragging the stock market down with it. Our energy stocks, CVX and XLE, were hit hard today.

The other focus is anticipating the monthly jobs report, due out Friday. Will the Fed raise rates before or after the November elections? That's the big question du jour, and Friday's report may well determine the answer - until the next piece of minutia hits the market. Both bonds and the dollar are quietly mixed today ahead of Friday's potential blockbuster report.

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Mini-Bricks in the Wall of Worry

We've often cited Mr. Russell's "wall of worry" that bull markets climb, a virtual wall made of "bricks" that can turn the bull into a bear.  They're constantly paraded before us by media of every form and stripe, always on our minds or at least in our subconscious.  You know some of the big ones:

 

  • Low interest rates that fail to improve world economies, leading to negative rates that may have disastrous unintended consequences.
  • The slowing economy and immense debt of China's monstrous economy.
  • A U.S. presidential candidate whom even the majority of his own party's leaders consider grossly unqualified for the job.
  • Income inequality that is straining the very fabric of the US economy and who we are.
  • Massive infrastructure problems that are essentially ignored.
  • ISIS
  • Internet hacking and outright attacks by unfriendly organizations and world powers.

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The Illusion of Power

By Matthew Kerkhoff

 

All hail the mighty Federal Reserve, the setter of interest rates and gatekeeper of the economy.

 

I don’t think anyone would go so far as to explicitly say that, but it seems to be the underlying tone I hear from many investors, as well as the subject of many op-ed pieces written by economists and investment advisors.

 

In this low interest rate world, everyone wants to blame the central bank. Asset prices in a bubble? Blame the Fed. No return for savers? Blame the Fed. Low economic growth? Blame the Fed.

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Richard's Thoughts on News and the Markets

By Mary Anne and Pamela Aden and the Dow Theory Team

 

Richard's Comments

 

Maybe it's mean to say this, but I think it's rather pathetic the way investment advisors, newspaper reporters, TV commentators and the so-called Wall Street gurus all try to explain away the day to day moves in the market.

 

Good or bad business news is announced and the market rises, stalls or sells off. Corporations issue rosy quarterly statements and their stocks sink. Recently, the CEOs of a number of major corporations stated that their companies were doing well, and that their stocks "should be" rallying instead of declining. The CEOs were obviously angry.

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The Politics of Fiscal Policy

by Jon S. Strebler

 

"Don't write about anything political; you're bound to upset readers if you do!" they keep telling me. But Richard wrote about politics and the candidates and just about everything else – didn't he? And how the heck do you not say anything at all during a Presidential year? Especially one that, let's face it, is absolutely unprecedented in modern times? And besides, politics and economics, politics and the market – these things are pretty darn connected, you know. So we're going to talk about politics, but in a milquetoast way that goes against my nature but might keep me out of trouble. 

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Daily Recap

It was a slow day for equities around the world, with little in the way of news.  The Global Dow managed a 0.33% gain, which was better than US markets could muster.  Coming into the close, US stocks were down over half a percent on average, with the Industrials 63 points lower.  Absent any real news, the focus is once again on the Fed and Janet Yellen's comments this Friday, with the latest thinking leaning towards a rate hike next month or in October.

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