Yesterday was another bad day. Oh, the market did what it did (which was not pretty), but for me, it just started out bad and it took the whole day for the flow to get better. It eventually did, but the taste of the bad start lingered.
The last few days in the market have seen a decent correction off the pace of record high after record high, and that might linger for a bit, but’s let’s keep this in perspective. The market is still in record-high territory relative to 2007, and it is still up sizably for the year. That is the perspective.
Furthermore, the nonsense about the Fed and China is, well, nonsense, so even though the market has been pulling back to just oh-so record territory, don’t expect it to fall part. For some four decades, China has done a competent job of managing its economy. It will continue to do so, so that nonsense about a credit crunch there will pass. The country has more than enough free cash-on-hand to handle any liquidity issues that arise.
As to the Fed, well, a headline from today’s news speaks volumes about the “non-reality” of how what the Fed does or does not do affects the market.
Wall St. opens higher after central bank comments
A few words from central bankers about this or that and the market dives or opens higher. This behavior reminds me of oh, say, the movie Young Frankenstein. The movie takes a once scary story and turns it into a laughable tale.
The reality is that the market will soon realize that it has nothing to fear, and when it comes to this realization, the buyers just waiting for an end to the panic run will be back with a fury. As I said on Friday of last week, the catalyst will come from economic data.
- The Commerce Department said Tuesday that orders for durable goods increased 3.6 percent last month, matching April’s gain. Most of the increase was because of a surge in commercial aircraft orders. Still, businesses also ordered more computers, communications equipment, machinery, and metals.
Steady as she goes will get the economic job done just about everywhere on the planet. Durable goods orders are a key component of the US economy, and the US continues to keep the plants rolling in this area.
- Overall demand for durable goods, items expected to last at least three years, rose to a seasonally adjusted $231 billion. That’s 7.7 percent higher than a year ago.
Equally important to an economy is the investment and reinvestment in business and it appears that in this key area, the US is keeping pace as well.
- A key category viewed as a proxy for business investment plans rose 1.1 percent in May, matching similar gains in April and March. The category hasn’t increased for three consecutive months since the fall of 2011.
All in all, chill, if you are fretting about the market. Better yet, don’t chill. Get fired up to buy the bargains because in this fire sale, they won’t last long.
- The Conference Board’s Consumer Confidence Index, was up for a third consecutive month in June. The index was reported at 81.4, which was well above the consensus expectation for a reading of 74.4. above last month’s revised reading of 74.3, and at its highest level since January 2008.
Trade in the day; Invest in your life …
