It is to the point now the less said the better. After all, how does one continue to articulate reason in the face of absurdity?
- The big red flag is how the Russell 2000 has now fallen to new multi-month lows.
It is true the small caps have traditionally led both in and out of bull and bear markets, but this time around, the context is different. The US economy and the Fed are in contraposition, each having an expected yet unexpected influence on the market, often even on the same day.
- Several Fed officials questioned their guidance if short-term rates were likely to stay low for a “considerable” amount of time. Other members suggested current guidance is appropriate for the Fed to be patient. Finally, the Fed lowered their growth outlook due to a higher U.S. dollar and concern over global weakness.
- Alcoa reported earnings and revenue on Wednesday that beat analysts’ expectations as net income rose more than 70 percent from a year ago.
This has turned the market topsy-turvy and no one, and I mean no one, can get the market right in the short term, unless their guess turns out to be correct.
- There’s still a smidgen of hope for a rebound, but only because there’s always a little hope. By and large though, today was a serious blow. And this time, I’m not so sure an immediate bounce back above it is in the cards. The bulls can shrug one stumble off, but they probably can’t shrug off two stumbles.
The above was written the day before yesterday, you know, before the Fed released their notes from the latest FOMC meeting and Alcoa released its stellar earnings report. I guess the writer missed that boat.
- Is the market driving you nuts here, reversing course before a trend can develop, and then reversing again before the ball gets a chance to start rolling in the other direction? If stocks were a boat, we’d all be seasick by this point.
Now the above is an accurate assessment, so somebody can write something correct about the market. My faith in financial writing is slightly redeemed.
- The most maddening thing of all about all this hot-and-cold stuff is, we still don’t have any true clarity (we have opinions, but no clarity) about what’s next for the market.
Again, we have a voice of reason about the reality of the current market. Nothing is certain and nothing is predictable, but everything is muddy.
- Alcoa posted third-quarter earnings per share of 31 cents, up 71 percent from 18 cents per share in the year-earlier period. Revenue increased about 7 percent sequentially to $6.24 billion, up 8 percent.
- Initial Claims have been below the all-important 300K level for four consecutive weeks and six of the last eight. Note that this is the first time since 2006 that Initial Claims have been under 300K for four straight weeks.
Here is what I know, though, and here is what I have been saying. On the one hand, the US economy is performing above the global norm, which is the way it should be, and, as long as that is the case, this volatility will frustrate but not kill the market.
On the other hand, the economic war with Russia is hurting Germany, which is hurting the overall performance of the EU economy, and that raises fear in the market.
- German exports plunged in August by their largest amount since the height of the financial crisis and leading institutes slashed their forecasts for growth.
Did I really write “the less said the better?”
Trade in the day; invest in your life …
