Earnings reporting is almost complete, the recent positive economic data has been digested, China is forgotten for now, Europe’s lagging economy is well known, and Ukraine is, well, still a problem on the geopolitical front. So where does the market find a catalyst to go higher? For the moment, it appears there is no catalyst to take the market higher. Even the revised GDP from the second quarter is not moving the market higher. It is old news. The market is stretched.
Again, we are in a phase now where the market has gone as high as it can go without a new catalyst. It can, however, fall back on bad news, such as what came out today.
- Ukraine President Petro Poroshenko says that Russia has invaded Ukraine.
If the above is true, then the market will have even more bad news to drive it down. Reports coming in from witnesses there suggest something big is going on, but what that might be is not yet clear. My guess is by the end of the day, it will be clear what is going on there. The market will not like it if Russia has actually sent in Russian troops.
In the meantime, we wait for the coming of Labor Day. The market will shift after that. All the boys and girls who invest other people’s money will return from a summer of frolicking in the Hampton’s, lounging on a beach in Malibu, or, traveling the world in their private jets. In short, trading volume will pick up and serious money will begin to flow.
- Automobile sales near an eight-year high bode well for consumer spending and factory production. Cars and light trucks sold at a 16.4 million pace in July, following a 16.9 million rate the prior month that was the fastest rate since July 2006.
The improving fundamental basis is a positive for the returnees to consider, but the effect of the economic war between Russia and Europe is a negative, as the fragile European economy seems to be taking it on the chin in that war. Russia is doing no better, which is a plus in my eyes because it puts pressure on Putin to reign in his ego.
When September rolls around, there will be good and bad to view for the market players going back to work, but one thing that will not likely be an issue is the one that played out this summer – an overvalued market.
There is no market bubble and that has become pretty clear with the recent round of earnings demonstrating the ability companies to profit from the increasing spending power of the US consumer. Speaking of spending …
- Bitcoin is catching on at U.S. online merchants including Overstock.com and Expedia, as customers use a digital currency that just a few years ago was virtually unknown but is now showing some staying power.
I am not sure the above means anything relative to the market, but it is interesting to watch this fad turn into something viable. No matter what weaknesses have been exposed about this most recent underground currency, it still is getting stronger.
- As of the end of June, bitcoin wallets, representing the number of users who have bitcoin accounts, have grown to 5.32 million, from 765,039 users a year ago,
So, who are the bitcoin users, since all bitcoin sales are final and irreversible and why are companies such as Overtstock.com and Expedia accepting the currency? The answer to the first question is:
- Bitcoin owners tend to be high net-worth individuals and tech-savvy consumers
and the answer to the second is:.
- Bitcoin has been used by retailers as a marketing strategy to bring some much-needed buzz to brands that may be struggling.
I don’t know, maybe Expedia and Overstock.com are struggling in some way, but me thinks the reason for accepting bitcoins is more basic, more fundamental to the bottom line.
- For retailers, the biggest benefit in accepting bitcoins is lower transaction costs. Coinbase and Bitpay, for instance, charge less than 1 percent per transaction. A credit card payment, in contrast, typically carries a 3 percent fee.
If the Bitcoin phenomenon keeps on growing, despite its problems, then it might be something to watch relative to the market. If it is ultimately about the bottom line, and it is, then those who do accept bitcoins will, in the end, have better bottoms lines, at least theoretically. Interesting …
Trade in the day; invest in your life …
