Well, a mighty fine good morning and a wish for a good week to all. My life changed this weekend, and it feels good. I am a married man.
Putting the above aside, I come back to a world where not much has changed. The market is what the market is, and no matter what happens in my life, or yours for that matter, the market will react to stimuli it deems important. However, there is one similarity between the market and me that comes to mind in this moment – we both get tired. I am tired from the past few weeks and so is the market, so don’t expect any great movement over the next few days from either of us. We both need to catch our breath after each of our respective emotional rides.
The market needs to digest the failings of the US politicians and the fact that the nonsense is delayed but three months, just as the S&P 500 hit a new record high on Friday, and I have to digest the success of this past marital week and my near term future, along with a new record high for me.
In any case, let’s take it light today, because I am going back to bed for a nap. I suspect we will both take it easy today. Before I go, though, I want to hammer a point I have been making for years now – 1) the doomsayers are wrong far more than they are right and 2) they never give up being wrong because they know eventually they will be right.
- At the beginning of the year, those seeing the glass as at least half-empty were expecting Europe to drag the economies of the world into recession, China’s economic growth to tank, the unrest in the Middle East to become a huge problem, the Fed to make a mistake, earnings to soften, and the politicians in Washington to send the U.S. into a depression. In short, the bears were calling for the sky to fall and for the U.S. stock market to crash and burn.
Okay, so this year the doomsayers’ prophesies again failed to materialize, at least not yet, but that does not stop them from finding yet another reason the sky will fall.
- Despite being dead wrong on Europe, China, the U.S. economy, earnings, and the how the market would perform in 2013, the bear camp remains largely undeterred. Instead of admitting defeat, the current battle cry is that stocks are overvalued and as such, will soon succumb to an episode of mean reversion akin to what was seen in 2000-02.
As always, we will see if the market is overvalued, but my sense is this is not the one time they will be right. Unless the global economy begins to sputter, i.e. Europe begins to reverse its correction, China somehow falls from the heights of its 7.5% growth rate, and the US fails to keep its forward economic momentum.
- U.S. home resales fell in September and prices rose at their slowest pace in five months, the latest signs higher mortgage rates were taking some edge off the housing market recovery.
- The Realtors group said home resales had probably peaked in July and August. The drop in homes resales adds to other data that have suggested the high borrowing costs are starting to slow the housing market recovery.
- Also pointing to a moderation in the pace of the housing market recovery, the median price for a previously owned home rose 11.7 percent from a year ago to $199,200. That was the slowest pace of increase in five months.
- While overall home sales rose 10.7 percent from a year ago, that increase was also the smallest in five months.
The above points to two things: the housing recovery is still going on and 2) the risk of it imploding are lessening as the market moderates. Keep in in mind, the US economic momentum still has room to go, but in the meantime, the economic movement overseas is forward as well.
- Hasbro Inc., whose popular toy brands include Monopoly, Nerf and My Little Pony, topped Wall Street’s profit estimates in the third quarter as strong overseas demand and cost controls helped overshadow weakness at home.
Yes, get your money in now. The doomsayers are wrong again on their latest prophesy.
Trade in the day; Invest in your life …
