Ho-hum, it’s Friday, the end of a rather un-notable week in the market. True, the market experienced a higher level of volatility than usual, but, even so, nothing truly problematic or unexpected happened, which makes the week, well, un-notable.

  • U.S. stock index futures pointed to a lower open on Wall Street Friday, with major indexes largely on track to close out a week of modest losses as investors grew cautious over the state of economic growth.

As I wrote yesterday, the breathless media is talking about investors’ concern about the future state of global economic growth, particularly that of the US, the largest economy on the planet. As I also wrote, the market looks forward, not backward, so the leading indicators, such as housing, personal incomes, employment, business spending, and consumer confidence, are more important than the economic anomaly that happened in Q1.

As well, what the Fed has to say, particularly the more dovish (lower inflation desires) members of the board, is also an leading indicator for the market, so what happened yesterday is a tell-tale sign of what is coming for the US economy, if the US economic indicators keep showing positive.  

  • In essence, Bullard told reporters after a speech Thursday that an improving economy and rising price pressures (Fed-speak for inflation) means that the Fed is getting closer to the time when it will need to normalize monetary policy (Fed-speak for hiking short-term interest rates back to “normal” levels) – and that the markets may not be prepared for such a move.

Given the summer blahs and all, it is hard to tell what the market is prepared for and what it is not, but yesterday’s price-action in the market is a clue, no doubt, as not everyone is on vacation. After all, when the Fed speaks, investors listen and what they heard yesterday is a dove telling us that interest rates might rise sooner rather than later, say March 2015, as opposed to May 2015.

  • Mr. Bullard said that he believes the most likely timing for the Fed’s first rate hike would be near the end of the first quarter of 2015.

Now, what the market did yesterday and what it is doing so far today is what I find interesting – it is not freaking out. Sure, it did for a bit yesterday, but, as the day ended, the bulls tamed the bears and the market finished, well, flat compared to where it had been.   

  • Japan’s unemployment rate hit a 16-year low in May, suggesting the economy will rebound in the third quarter from a sales tax hike and consequent slump in consumer spending.

The above is just one more piece to a picture that is quite different from what the breathless media is painting. Be that as it may, today is Friday, so here is a bit of education about the market, a “darker” side of you will, but, nevertheless, one that market players should know about, even if there is not one dang thing one can do about it.

  • Dark pools were created to allow investors to execute big trades without tipping off the market. But ever-larger volumes of trades have been shunted into dark pools and critics say their opacity makes markets less fair for other investors.

Yup, critics are correct, at least my intuitive and logical sense tells me they are correct. When you have large institutions moving lots of money about in secret, well, “shiver me timbers,” call me crazy, but one should think there is a whole lot of collusion, misdeeds, and other such greedy manipulations happening. After all, we are talking about the big banks, right?

  • The New York State attorney general’s lawsuit alleges that Barclays promised to get the best possible prices for customers looking to buy or sell shares but instead took steps that maximized the bank’s profits and executed nearly all of its customers’ stock orders on LX instead of on exchanges or other venues that might have offered better prices.

Yeh, yeh, yeh … Just make dark pools illegal and let’s move on …

  • Google Inc’s Android software is coming to cars, televisions and watches this year, as the Internet search giant races against Apple and other tech companies to extend its business into a rapidly broadening field of Internet-connected devices.

The “Internet of things” is coming fast. The world of little networks will soon surround us allowing us to exert ever more control over our lives. Turn on this or turn off that on the way home, have my coffee ready and set the oven at 350 degrees. Record that show I just heard about on my car computer just after I ordered tickets for the community fund raiser while turning left because my watch told me to avoid heavy traffic ahead. Oh, and there’s my watch telling me my blood pressure is up from the busy traffic. I’ll have to check that against my other recorded health data on my home computer, you know, the data recorded throughout the day, when I get home in exactly three minutes and 22 seconds.

Trade in the day; invest in your life …

Trader Ed