Today is the first day of February, right? Yeh, I thought so, but I wasn’t sure when the market opened this morning and all three major indices jumped up, reaching toward 52-week highs, and the NASDAQ stepped into territory it has not seen in 11 years. The reason I wasn’t sure is the headline of this column. As I read the words “Hope Withers” in the headline of an article, fear filled my very being and I expected the market to drop, perhaps significantly. So, even in in my fear-gripped state, I read on …
It’s questionable whether the market can string together two months of gains after economic worries, European debt troubles, and lackluster corporate outlooks handcuffed markets even before February began.
Imagine my surprise as the opening bell rang and a sea of green numbers filled the screen and analysts scrambled to explain why the market wasn’t falling, especially after the “weak” performance at the end of January, the “weak” employment numbers, the “weak” GM auto sales, the overhang of Europe, and on and on …
We live in a cynical world, a cynical, cynical world … Jerry Maguire
Thanks, Jerry, and you are correct; we do live in a cynical world, a media world of bleak headlines, carefully chosen words to attract the eye and stimulate bio-chemicals that cause us to read on, to see what the next shoe is and when it will drop.
Given the recent history of the market, the market could reverse course today, however, aside from the article mentioned above, the fact is the market has reasons for climbing, not the least of which are asset managers, money managers, and investors in general are sensing the train is leaving the station …
As Europe closes in on a structural compromise to deal with its debt crisis, Greece inches closer to reducing its debt through a soft default, Spanish and Italian bond yields keep dropping, and consumer/business confidence in Europe slowly returns, the market could be sensing a balance shift. On one side of the scale, a little fear is removed and on the other is added an ounce of optimism, a feeling that maybe, just maybe, the world is not coming to an end.
That tiny ounce of optimism moving the scale might also come from the fact that the euro is up, the European stock market is up, U.S. manufacturing data is up, small-business loan demand is up, Germany manufacturing data is up, China’s manufacturing data improved, and …
“Whoa! Easy boy. I know you like to see the bright side of things, but don’t get ahead of yourself or the market for that matter. There is still the business of U.S. politics and Iran …”
Hey! Get out of my head you, you, voice of reason! Okay, so putting U.S. politics aside, the Iran issue is a big deal, and what happens in the near term could easily tip the scale back to fear.
Tensions between Iran and the West have been on the rise since the EU said this month that it would embargo Iran’s oil exports from July 1. The International Monetary Fund has warned a supply disruption caused by the sanctions could push oil prices up by $20 to $30 a barrel, exacerbated by the thin oil stocks held by many consuming countries.
Okay, okay, let’s just hope the market stays in the green today.
Trade in the day – Invest in your life …
