The market has to contend with myriad inputs, most of which emanate from the media. The problem is that the media often is contradictory in its reporting. This makes understanding the market a bit more difficult, especially for those who rely solely on the “news” to understand the market.
- Financial stocks slipped on Friday as consumer sentiment fell to the lowest level since April and retail sales increased by less than forecast.
- Financial stocks traded near monthly highs on Friday as leading money-center banks advanced.
The above two financial stories, written by the same reporter, came in just about twenty minutes apart. Independently, each story gives a completely different perspective on momentum in the financial markets today. What is of greater interest to me is the first story suggests a reaction to the data that came out this morning and the second clearly states how wrong the first story is. And yet, there is more …
- U.S. stocks edged up at the open on Friday after retail sales and wholesale inflation data did little to alter market expectations the Federal Reserve may begin to scale back its stimulus measures next week.
In the above, the story line is that QE tapering is no longer a big deal. In the story below, the exact opposite is the case.
- Asian shares fell on Friday and the dollar held to overnight losses against the yen as investors fretted over not whether but by how much the U.S. Federal Reserve will cut its monthly stimulus at next week’s monetary meeting.
I just don’t know how anyone can do it. I mean, how is it that anyone can find any news of any value in assessing the market. True, I understand that data is data, no matter how it is reported, but adding “opinion” or adding in the “consensus” sentiment about the data only confuses and confounds the issue of what the market is truly feeling about the data.
Keep the above in mind when assessing the “news,” especially these days when “bad” news is all the rage.
- Another down-to-the-wire fight, potentially more toxic than usual, is rapidly shaping up in the U.S. Congress as conservatives prepare to exploit looming fiscal deadlines to derail President Barack Obama’s signature healthcare reform law.
No one knows what is coming, but sensationalizing the potential helps with selling the news. The problem with this approach is that in times such as these, overselling the bad news takes the market in another direction.
- It’s hard to argue with the point that investors have become more or less numb to the scary headlines.
It appears this is the state of the current market – numb to the news. It seems to be making choices based on fundamentals, and despite the news, the fundamentals are still pointing toward forward momentum; thus, the market pushes into the green, even if the news tenor is that it should not. In this light, consider the following.
- Anyone with a negative take on stocks at this point must, however, consider the possibility that something else is afoot with the most recent bounce higher.
Consider as well the reality of 2013 so far this year.
- The market has whiffed on virtually every opportunity this year to take a meaningful pause, falling 5 or 6 or 7 percent under conditions that might otherwise demand something far more significant.
And, consider that the flow of investor money still seeks higher ground.
- Investor sentiment has improved as well, hitting a two-month high of 45.5 percent bullish in the most recent American Association of Individual Investors poll.
The media does what it has to do to sell what it offers. It is not independent; it needs to make money, so expect that it will continue to slant toward the sensational and bad.
- U.S. retail sales rose slightly in August despite strong demand for automobiles and other big-ticket items, the latest indication economic growth slowed in the third quarter.
Oh really? As always, we will see.
Trade in the day; Invest in your life …
