Some 650 points ago (DIJA), the talking heads talked up a downside for the market. Those market players not on vacation listened and responded accordingly. We now have a correction, of a sort. Not quite a 5% correction, but 4% is close enough. We still have a few trading days left in August, so we might yet get to the 5% mark, but in the meantime, keep your eyes open for opportunities and buy what you like. The preschool sale will not last that long.
- Home Depot’s (HD) Q2 EPS of $1.24 beat forecasts by $0.03, while revenue rose 9.5% to $22.52B and exceeded expectations by $0.78B. Net profit increased to $1.8B from $1.5B. “Our business benefited from a rebound in our seasonal categories, continued strength in the core of the store and the recovering housing market in the U.S.,” said CEO Frank Blake.
The above data and information tells us much about the future of the market. Although I don’t totally agree, it has been said in the past that “as housing goes, so goes the market.” I do agree in today’s market world, the recovering housing market is important, but other aspects of the US economy are equally important. Having more folks employed is one aspect of the economy that is equally important. That will happen in time, as the new economy transitions and employers find their overworked workers cannot keep up with demand, thus, affecting the bottom line.
- The government reported that worker productivity in the U.S. for second quarter of 2013 rose by +0.9%, which was above the consensus for a reading of +0.5% and Q1’s rate of -1.7%.
Employers can squeeze only so much work out of workers before the workload affects output. Eventually, employers will hire more workers, if the economy keeps growing, and it is still growing.
The reality of the above makes the statement below quite fascinating. Sometimes, market analysts cannot see the forest for the trees.
- The Fed’s biggest and most important job right now is to get a grip on the unemployment rate – something which has pretty much zero correlation with markets.
From a trader’s perspective, the above seems ludicrous. The market often awaits and responds to the monthly employment report. As well, investors look to overall employment as a sign of things to come in the market. So, suggesting the unemployment rate has “zero correlation” with the market is, well, flat out incorrect. Just another example of why one should be wary of the myriad market analysts out there.
Bond yields have been on the rise for some time now. Is this a bad thing? Is the selloff in bond prices something that will hurt the stock market or is the rise in yields good for the stock market? It is an interesting variable that will show its positive or negative effect in time.
Here is something worthwhile to think about as you build your market expertise. The idea contained is a good one – many variables affect markets.
- It’s always hard to prove causality when it comes to market moves, especially ones which happen over the course of a few weeks. Did quantitative easing cause the stock market to rise? Probably, although we can’t know for sure. Did Larry [Summers] rumors cause the bond market to fall? Maybe – but they certainly can’t account for all of this massive move.
The above is so true, and anyone who suggests differently thinks he or she is far wiser than he or she is. Yields are rising because there is less demand, but why this is so, well …
- The bond markets have moved dramatically over the past couple of months, and no one really knows why.
Now the above makes sense to me, but my speculation is that folks are getting cash on hand to be ready for the coming market. Of course, my speculation is no better than anyone else’s, but at least I couple mine with a broad overview of the economy, the one factor that affects the market more than any other because it affects the business bottom line, which, ultimately, is the one thing the market cares about more than any other.
Speaking of affecting others, the following information is interesting, if nothing else. It has little to do with the market, I think, but, again, who knows?
- When people are having sex regularly, they’re happier, stronger, eat better and exercise more, researchers have found.
The conclusion of the study above is that folks who do have more sex make more money, apparently. Maybe, then, the factoid above (if true) does have something to do with the market, after all.
Trade in the day; Invest in your life …
