Frankly, I woke up this morning not having a clue as to which way the market would go. Asian markets finished weakly on more talk about the Fed … blah … blah … blah …
Maybe I am dreaming, but it sure would be nice if there were a time when the market focused solely on things that truly matter. Thinking about that, I realize it can never happen because the market is about gambling, making bets on a future outcome and when that is the case, all manner of things are in play. In a weird way, the market game seems linked to an ancient past, a time when oracles cast bones, studied astronomical events, or analyzed weather to predict the future. It is hard for humans to let go of that which produces fear.
- Those who stick around the markets learn that trading is a journey.
The above wisdom comes from our own Kira Brecht (Top Traders Share Tips On Staying In the Game, TraderPlanet Newsletter, “Today”). The article is worth a read, especially if you are new to the game I described in the above paragraph. Trading is a journey and part of that journey is learning that market short-term movement derives from myriad influences, many of them having little to do with economic or market fundamentals, but long-term market movement is, ultimately, all about the fundamentals.
A case in point is the brewing tempest regarding the US debt ceiling and budget.
- A trio of Tea Party-backed U.S. senators threatening to stall a bill to fund the U.S. government ran into a wall of resistance Monday from top Senate Republicans, including Minority Leader Mitch McConnell. In statements issued Monday evening, McConnell and the second-ranking Republican, John Cornyn of Texas, made it clear that they would not support the tactics of freshman Senators Ted Cruz, Mike Lee and Marco Rubio, which would have increased the odds of a government shutdown on Oct 1.
The antics here will affect the market to a degree in the short term, especially if the antics result in a short-lived government shutdown. Though seemingly grave, a government shutdown will not affect the long-term outlook for the market. Think August 2011 and then remember what the market has done since then. Despite the threat of the US government defaulting on its debts, the market has risen steadily, after a severe downturn. The doomsayers and pundits tell us the reason for the market rise is the Fed’s easy money policies, but they are mostly wrong. Sure, the money spigot has helped the economy heal, but it is the economic healing that has drawn the money into the market.
- Lennar Corp, the No. 3 U.S. homebuilder, reported a better-than-expected quarterly profit as it sold more homes at higher prices, indicating the U.S. housing recovery is firmly on track. Lennar said on Tuesday orders for new homes rose 14 percent in the third quarter and that the long-term outlook for its business remains “extremely bright.”
Once the healing starts, it is hard to contain. It becomes infectious, and so as the US economy heals, so goes the rest of the world.
- German business morale came in below expectations but it improved slightly to its highest level in 17 months in September. German business confidence rose for the fifth consecutive month in September, as executives became increasingly optimistic about the prospects for the Eurozone’s largest economy where unemployment is sitting at a twenty-year low.
- Markit’s Eurozone Flash Composite PMI jumped to 52.1 in September from last month’s 51.5, its highest since June 2011 and beating expectations for a reading of 51.9.
As I have been writing, keep your eye on Europe, as it is the largest economic block on this planet. Get your money into the market on the dips. I cast the bones earlier this morning, Jupiter is aligned with Mars, and it is as sunny as can be outside right now, so now is the time.
Trade in the day; Invest in your life …