I will just get the upside right out in front this morning, and then I will probe into the market’s behavior.
- Consumer confidence unexpectedly increased in July to the highest level in six years as Americans’ views of their finances improved, according to the Thomson Reuters/University of Michigan final index of U.S. consumer sentiment.
Think back to just two days ago when I wrote, “The world is a crazy place. Often up is down and down is up.” I actually meant that and today’s market behavior suggests I am onto something.
- U.S. stocks fell, with the Standard & Poor’s 500 Index heading for its first weekly drop in more than a month, on disappointing earnings from Newmont Mining Corp. and Expedia Inc. amid concern central banks will pull back on stimulus programs.
Of course, the market has not fallen yet today, but it looks as if it will and I have to ask the question: Is the market really going down because earnings from a mining company and an online travel agency disappointed the market? If that were true, how does one factor in the consumer confidence report above and how does one factor in the earnings of an international corporation with its finger on discretionary spending worldwide?
- Starbucks Corp. jumped 7.3 percent after reporting profit that beat estimates.
Furthermore, is Bloomberg News seriously reporting that the market decline today is from, dare I say it, concern over QE tapering?
Ya seen what I mean about the world is a crazy place? Wait! Actually, it is not the world, per se, that is missing a screw; it is news reporting that is crazy. I see how many learned folk can believe the state of journalism today is in decline. Is it possible the market is going down today because it has been going up steadily for weeks? How about the market is going down for technical reasons?
The reality is the market sometimes goes down simply because there are more sellers than buyers. Some days, the buyers play hooky, play golf, spend time with their families, go on vacation, or simply do not feel like working until later in the day. Some days, the market just goes down, without any specifically discernible reason.
Okay, it’s not all news outlets reporting the QE fear thing. In fact, many are writing and talking about more sensible issues that can affect the market.
- Another dramatic showdown between Republicans and the White House over federal spending looks inevitable this fall, with scary talk of government shutdowns and default on government debt.
The above is a genuine concern for the market, albeit a bit overblown at this point. Consider that the sequester cuts are in place, the deficit is shrinking, government is shrinking, the economy is showing solid movement, and the gad flies on this issue (Congressional conservatives) are on the political defensive for precisely the reason stated as an upcoming fear. Nevertheless, as I have said, the world is a crazy place. Anything can happen.
One thing that can and probably will happen if earnings keep on pace is that the market will go up, down, up, up, up, and down, or something like that and by this fall, when the so-called budget battle takes place, the market will be appreciably higher.
In the meantime, here is a bit of feel good news, at least I think so, because I like to think the market, and the indeed the world, is on a path to greater fairness. I know I have rose-colored glasses that I put on from time to time, but, sometimes, they just make some ugliness in the world just a bit prettier.
- U.S. prosecutors indicted billionaire Steven A. Cohen’s hedge fund for insider trading, a rare move that could end the career of one of Wall Street’s most successful investors and trigger a fundamental change in how traders try to gain an edge over rivals.
- A U.S. regulator on Thursday said it reached an $885 million settlement with UBS over allegations the bank misrepresented mortgage-backed bonds that were sold to Fannie Mae and Freddie Mac during the housing bubble.
As I put this last sentence together, the DJIA has gained back over 100 points from its low point of the day. Maybe, Newmont, Expedia, and QE will prove to be less and issue for the market than Bloomberg News is reporting. Go Starbucks!
Trade in the day; Invest in your life …
