“Malaise” is my word for today. The market is exhibiting “a general feeling of discomfort, illness, or uneasiness whose exact cause is difficult to identify.” Yesterday, I felt the market coming out of it, but today, again, a lack of energy resulting in a slow drift downward is the general mood. Frankly, it makes me want to go back to bed. Well, maybe it is the gray sky, the cold weather, and the snow falling here in Utah that makes me want to go back to bed. Or maybe both …
Back in 2009, when the US government was trying to figure out what to do about the big banks, one core issue in the talks was that banks had stopped being banks; they had become trading houses sitting on high risk bets that had lost them multi billions. Somehow, they thought back then, new regulations must force banks back to being banks, which meant generating revenue form lending money. Despite any other issues one might have with the Dodd-Frank financial reforms, one thing the reforms did do is force banks back to acting like banks. They are once again relying on revenue from lending to beef up their profits.
- Wells Fargo on Friday reported $5.1 billion in profit for the fourth quarter, a 24 percent increase, driven by the bank’s lucrative mortgage business. Seizing on low-interest rates that have spurred a flurry of refinancing activity, the San Francisco-based bank again notched record profits. For the last 12 quarters, profits at the bank have increased.
The above bodes well for the financial sector, the US housing industry, and the US economy, and all doing better bodes well for the market, so why isn’t the market happier? So far, earnings have been okay, Europe is quiet, China is getting healthy, the US economy is, well, the US economy, US politicos are keeping their traps shut, and the world is not falling apart today. So what is the cause of the malaise? I guess that’s what makes a malaise a malaise – the cause of the malaise is difficult to identify.
- The US trade deficit unexpectedly widened in November, a drag on economic growth, although the increase was driven by a surge in consumer goods imports, which gives a positive signal for consumer spending.
The constant dribble of contrary economic data, such as the above, could be a source of market discomfort. Then again, perhaps the market is simply fatigued from the years of uncertainty about the US and global economy and the uncertainty of how US and European politicians will resolve the US and European debt issues.
Looking back over what I wrote today, I realize, I am in a mood, a malaise of a sort. As I said, the weather outside is gray, cold, and snowy. On top of that, the market is funky, which means my trades are funky, which means I am funky. I guess there is just no escaping the fact that today is, well, just a funky day. At least I can go back to bed. The market cannot, so it must continue through the day with its malaise.
Yup, I think I will go back to bed. The problem with going back to bed, though, is that I will wake up and nothing will have changed. Unless it stops snowing, the temperature rises, the sun comes out, and the world as it is suddenly morphs into something more certain, things will remain just as they are now. My second word for today is dreary. “Okay, dude, stop writing.”
Trade in the day; Invest in your life …
