That Was The Week That Was-3rd Week May

From USA Today.  Seems that way for a lot of people…

Bad New First - Markets Fell Thursday over 200 points Before Closing off 160+ on the DJIA, the worst pasting in 5 weeks (MarketWatch.com 5/15). The Russell 2000, is, according to experts, in correction territory. The reason for the drop in domestic stocks Thursday had to do with weak economic data coming out of Europe. Mike Larson, of Money and Markets, had a different slant. He reported that billionaire hedge fund manager David Tepper told an audience in Las Vegas that it was ‘nervous time’, and that caused the free-fall. Tepper, who made $3.5 billion last year said that he had taken 40% of his equity assets off the table earlier in the year. In Vegas he told other hedgies, ‘The market is dangerous right now.’ That was enough to spark a free-fall. (5/15) Tepper has respect in the institutional investment community.  Or, it could have been a combination of poor economic news and a strong scary message. Interestingly the VIX was extremely subdued. There was no real fear in the selloff. Here’s the play by play as the week unfolded.

WSJ ‘Tech Stocks Are Still Too Silly For Some.’ It’s been the youngsters that have fallen out of favor in 2014. Those high flyers that enamored investors with the promise (wink-wink) of super returns have fallen. In the ‘blink’ of an eye, reports the Journal (5/12). ‘We’ve gone from three times silly to times times silly,’ said Mitch Rubin, chief investment officer at RiverPark Funds. That’s because many investors still feel that valuations are too rich. These tech stocks are now cheaper but not cheap. WSJ/5/12 

Monday Market’s Rocked! New highs for the Dow, S&P 500 Index and both the Nasdaq and Russell 2000 were up sharply. According to Barrons.com (5/12), stocks got a boost when China’s State Council offered a blueprint for liberalizing its financial markets. Momentum stocks got a jolt as almost all were up for the day. It was too early to tell if the momentum rally was sustainable. Or, a Dead Cat Bounce.

Bob Doll, Chief Equity Strategist Nuveen Asset Management Provides these facts to the market direction: (5/12)

• Improving trade
• Eurozone on better footing
• House prices are rising
• Impact of both manufacturing and energy are broadening

 Wednesday Indices Fell as Global Bond Rates dropped to their lowest levels of the year (WSJ 5/16). According to Min Zeng, writer for the Dow Jones, sluggish economies in E.U and U.S. have ‘confounded’ central bankers and surprised investors. The yield on the 10-year fell to 2.523%, the lowest in more than 6 months. Scared investors ran to bonds Wednesday as central bankers promised to keep rates low and pumping in more monies into the economies. Joseph G. Paul, chief investment officer at AllianceBerstein, in a Barrons.com, ‘Wall Street’s Best Minds’, explained why he forecasts the 10-year return of U.S. stocks is 7.1% a year. He goes on to explain that low returns are a fact of investment life today and that investors should adjust their perspective to accommodate this new reality.

Finally: The Chart of the Week. This tells the story more than anything on how this market has disappointed so far this year. Chart sent by Talmer Financial. Source Bloomberg- Business Insider 5/17

Questions call Paul @ 586 295 0430 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

SECURITIES PROVIDED THROUGH WESTMINSTER FINANCIAL SECURITIES, INC. MEMBER FINRA/SIPC