Still Treading Water?

Still Treading Water?

Treading WaterToday let’s look at a number of issues while the stock part of financial markets continues to perform its dance routine, one step forward and then one back. For the year thus far through Monday the 19th, the S&P 500 was only higher by 1.99 percent, the Dow 30 Industrial index and the NASDAQ Composite had lost .39 and 1.22 percent respectively.

But the next four days of last week were a breath of springtime. The NASDAQ added 2.17, S&P 500 a gain of 1.48, and the Dow 30 rose by 1.42 percentages. In terms of technical charting, it appears we may have a new bullish trend at least in the short term.

Remember my comments about most bonds headed for losses as interest rates rise? Mr. Market says, You’ll have to wait for it! The iShares Barclays Aggregate Bond ETF is the big winner thus far at a positive 2.63 percent gained through the 23rd. Barclays 20+ Year US Treasury Fund, (TLT), is a safe haven for now. It has gained over 10 this year.

The Federal Reserve Bank watchers can take their pick of voices to listen to, but the message is still confusing. William Dudley, the NY Fed governor, said last week (in my estimation) that since we can’t get any barnburner inflation going, we will keep throwing gasoline and matches on the economic wood until we do. Do any of these folks shop at the grocery store or fill their own gas tanks? The things you and I buy are rising a lot more than their targeted 2 percent.

They have assured us that they are on top of their game and know what they are doing and when they should do it. This is the same group whose Chairman “Helicopter Ben” Bernanke said he did not think subprime mortgage problems would cause a recession, just a few months before the bottom caved in on itself!

The good news is that we Americans are so darned hard to discourage for very long. We just keep getting up, inventing new solutions, working too hard, and overcoming the problems we face normally as well as the special ones the government-types pile on.

If the majority of economists and Federal Reserve people were better students, they would go back to pre-1929 history and see how to throw a truly short recession. There are a few so-called hawks on the governing committee of the Fed, but they have been ignored as being out of touch with modern realities.

Other good news includes the historical probability that, after this period of stock price reset, adjustment, correction—whatever you want to call it, the year’s stock market will climb to a new higher rung. For people who claim to be so upset about the disparity between the haves and have nots, this alliance of the Administration and the Fed has been doing a great job of promoting stock price inflation and helping the truly rich get that much richer. What does some inflation matter to them?

(Past performance is no guarantee of future results. Advice is intended to be general in nature. Statistics from Worden Brothers, Inc., TC2000, 2014.)

May 30th, 2014|Categories: Economy, Government, Investment Management, Stocks|