That Was The Week That Was-4th Week March

 

BAD NEWS FIRST! Wednesday Markets Fell! Worries about the first profit decline in six years and concerns about weakness in the U.S. economy and the Dow fell 292 points, The S&P 500 lost 1.5%, The Naz, affected by selling in tech and biotech, lost 2.4%. Steve Massocca, Wedbush managing director said on CNBC, “It had a big run. It’s only natural to see a correction. We had excess ebullience and some of that is burning off today. …durable goods were not very good. People are starting to get concerned about that king dollar is going to cause earnings issues.” The selloff in equities was matched with a selloff in bonds. The dollar also sold off, and usually that would have been a positive for equities. Marc Chandler, Brown Brothers Chief Currency Strategist, said the markets had been trending together before the Fed meeting last week. We may retest the March low, he said. Bob Pisani at CNBC said Wednesday that there was no obvious catalyst for the declines. Michael Kahn, in Barrons.com ‘Getting Technical’, wrote that he had good news and bad news. The good news is that major trendlines were supporting a current bull market and pointing to the upside. The bad news was that key sectors such as semiconductors and banking were stumbling. He concluded that the market was taking a little break. ‘Given that breadth is still solid and small capitalization stocks continue to outperform, we should not be too worried.” CNBC.com 3/25/2015 and Barrons.com 3/25/2015

charted published WSJ 3/27/2015.

THURSDAY MARKETS WHIPSAWED FROM DOWN TO UP TO CLOSE DOWN- SLIGHTLY. But it’s oil the story for the day and probably for next week. Saudi Arabia is in armed conflict as they launched airstrikes against rebel forces in Yemen. Oil prices spiked as Yemen is in a critical geographic position for the flow of oil flowing from the Persian Gulf to reaching the Suez Canal and other seaborne trading routes. The Saudi’s and other Middle East allies are operating an armed conflict for the benefit of the U.S.A. Bjame Scieldrop, chief commodities analyst at SEB Markets, in a note wrote,’ Just the headline of this happening is driving chilling fears into the bones of all oil consumers.’ The fact that Saudi Arabia the biggest and most important oil producer in the Middle East is now in armed conflict. (MarketWatch.com 3/26/2015).

  There are some people I know that sound smarter than me because they simply ‘sound’ smarter than me. I am sure you know someone like that because when they talk about something they sound like they really know what they’re talking about even if they don’t. They have this voice of – Authority. Sometimes they do know what they’re talking about, and a lot of time they don’t. They just sound so much smarter than anyone else in the room. Or, at least they sound smarter than me. The reason I bring this up is a friend/client called me up and said he was meeting with his corporate investment people and talking about his future retirement. He’ll be meeting with people who talk like that. None of them are as old as my friend but they all sound so knowledgeable. Between you and me, I don’t think he’s ready to retire just yet. He likes what he does and I don’t really  think he’s ready to senior globe trot, cruise the seven seas on those massive floating Petri dishes or browse antique stores for the next 25 years. But he was meeting with investment people who will present him with a ‘road map’ to retirement and beyond; and how his current assets will manage to pay for the next quarter of his century with the same quality of life that he’s gotten used to. They will do that plan today and they’ll say it in a way that sounds smart. Even if it isn’t. The important thing to remember is that they will not be there for my friend’s grand event nor will they be holding his hand at anytime during that quarter of a century of life.  What they will do is leave a piece of paper with some scribbled advice on how to best manage his affairs way down the road. They’ll do that without knowing the politics of the future age, the global economics, inflation; or anything that happens to my friends and his family that throws a monkey wrench in their all so perfect recipe of a plan. The interesting thing about retirement is that our great grandparents really didn’t think much of retirement. Besides not living as long as we do now they didn’t look forward to a time where they wouldn’t work. Retirement, I found out, is a modern invention.  If you were a farmer in the 1800’s, or a city slicker in the 1900s, you didn’t quit at 65. My grandparents worked till they died. They may not have been lifting engine blocks at Dodge Main for eight hours, but they did do something. Yours probably did the same. Now I told my friend who is thinking of that day that he should listen and take notes, but he should also remember that things change before and during retirement. What sounds reasonable today is not something you may want to do tomorrow. Your life changes.  While it’s good to have a goal, make reasonable plans based on reasonable expectations, don’t engrave a plan into stone. As a kid you may have hated broccoli and today you love the stuff. That’s the thing with a retirement plan- it may look wonderful today and not so good tomorrow. The best advice I can give anyone when planning a long retirement is accumulate as much money as you can during your working years. Everything else will fall in place if you have that.

JIM CRAMER CALLED THE MARKETS FORWARD MARCH- CHOPPY. CNBC 3/20/2015  and this could be the reason why…

 Currency Wars & The Future of U.S. Monetary Policy could have the possibility of major volatility as we enter the 4th week of March. James Bullard, St. Louis Federal Reserve President, said last week and reported Monday, that a market reaction known as a ‘Taper Tantrum’ may happen again as it did a few weeks back.  There is a huge amount of cash exiting the eurozone and heading for the U.S., Denmark and Switzerland. The strong dollar is caused as much by the weak euro as monetary policy here in the U.S. (WSJ/3/22/2015). JP Morgan has bet on a weaker euro throughout the recent decline and believes it can fall further. The euro is at a 12 year low against the dollar. Bullard admitted that large multinational U.S. firms would be hit by the dollar strength. However, he pointed out that a ‘hedging strategy is part of running a big multinational. The massive inflow of money from European investors has driven the dollar higher and seen a rally in Treasuries even as a rate hike looms on the horizon. Another problem for European investors is that European governments are trimming budgets which means they issue fewer bonds.This make the European investor to look elsewhere for returns. CNBC.com 3/23/2015.

 

 

MADE ME SMILE… From USA Today.

WHATS ALL THE FUSS ABOUT? Jay Hatzius, chief economist at Goldman Sachs, in a note to clients, speculated that an eighth of a point Fed rate hike is what we can expect. ‘There is a small chance that the Committee could decide to go with a ‘mini’ first hike for an example an increase in the target range of only 1/8th of a point.’ He also suggested the first hike would be in September. CNBC 3/23/2015

Peter Oppenheimer, chief global strategist at Goldman Sachs, offered to CNBC last Monday (23rd) that the U.S. Markets were not in a bubble- yet. He also doesn’t think that U.S. markets will do any better than 4-5% in 2015.

Avi Gilburt reported in MarketWatch.com 3-23-2015 that the markets have not had a 10% pullback in some time but that we should expect one. He also believes that the markets will edge higher in 2015. Avi also believes we continue to be in a bull market.

 A NEW WRINKLE IN THE FED’S VIEW OF THE ECONOMY. Inflation and new home sales increase. The CPI rose in February. The first time in 4 months. New home sales were up 8% in February! The highest level since 2008.  Joseph LaVorgna, chief U.S. economist for Deutsche Bank said that there was some tentative evidence that the economy is maybe turning back up just like it did last year. The economy still remains wobbly. But, according to Richard Moody, chief economist of Regions Financial Corporation., in a note to clients, the latest consumer price date could give the Fed confidence inflation is heading toward its 2% target. There they have insisted they’ll begin to raise rates. WSJ 3/25/2015

Remember that there are always a dozen reasons to sell and only a few to buy. Investors should remember to have cash on hand to take advantage of buying opportunities.

QUESTIONS CALL PAUL @ 586 295 0430 or WRITE HIM @ pstanley@westminsterfinancial.com Share this blog with someone who cares about their money.

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