INSIGHTS
APR
14
WEEK AHEAD...
Again, we have new record highs in all the major indexes. The market is up about 12% this year and we are only a little more than a quarter of the way through. The rally, some say, is a direct result of being pulled off that Fiscal Cliff that scared everyone so much. Some say it is directly related to the Feds easy money policy. Then there are those that actually believe that the U.S. Equity Market is the best option of all options.
We will continue to believe the simplest explanation. The economy is improving. Unemployment is decreasing. Consumer spending is rising.
T
he rally we are in the middle of is one of the most unloved, disrespected rallies in history. You can tell that just by looking at cash inflows at mutual funds. After what we have experienced over the last five years, you would think that any signs of a healthy, strong rally like we have now would bring every retail investor back to the table. It hasn’t happened…yet.
We do think that the retail investor will continue to move back into the equity markets, albeit cautiously. This process could possibly take months and at some point we will be increasing our risk assessment. So for the next few months expect more of the same.
Earnings season is now in full bloom and it is continuing to be as dull as any in recent memory. We don’t expect any excitement this time around and the markets will reflect that. Dull, listless trading, trending higher.
Some interesting data points: Housing Starts, CPI, Jobless Claims and Leading Indicators on Thursday. We do see these numbers all showing improvement as we move into a modest growth cycle.
Earnings will be at the forefront with Citigroup (C), General Electric (GE), Google (GOOG), Bank of America (BAC), Yahoo (YHOO), and McDonald’s (MCD) amongst dozens of companies reporting.
Last but not least; North Korea still is causing fits in the Geopolitical world. Yet, equity markets have not shown any fear in relation to the Supreme Leader’s threats. Doesn’t say much for the young ruler when a country the size of Maryland and a smaller GDP causes a whole continent to shudder and barely anyone flinches as he threatens a nuclear strike to either South Korea or possibly Japan. It’s obvious his threats just seem like a ploy to get more aid for his people. If the little tyrant does deploy anything on Monday (his grandfather and North Korea’s founders’ birthday) markets will react suddenly and sharply.
A major buying opportunity may emerge.
We will continue to believe the simplest explanation. The economy is improving. Unemployment is decreasing. Consumer spending is rising.
T
he rally we are in the middle of is one of the most unloved, disrespected rallies in history. You can tell that just by looking at cash inflows at mutual funds. After what we have experienced over the last five years, you would think that any signs of a healthy, strong rally like we have now would bring every retail investor back to the table. It hasn’t happened…yet.
We do think that the retail investor will continue to move back into the equity markets, albeit cautiously. This process could possibly take months and at some point we will be increasing our risk assessment. So for the next few months expect more of the same.
Earnings season is now in full bloom and it is continuing to be as dull as any in recent memory. We don’t expect any excitement this time around and the markets will reflect that. Dull, listless trading, trending higher.
Some interesting data points: Housing Starts, CPI, Jobless Claims and Leading Indicators on Thursday. We do see these numbers all showing improvement as we move into a modest growth cycle.
Earnings will be at the forefront with Citigroup (C), General Electric (GE), Google (GOOG), Bank of America (BAC), Yahoo (YHOO), and McDonald’s (MCD) amongst dozens of companies reporting.
Last but not least; North Korea still is causing fits in the Geopolitical world. Yet, equity markets have not shown any fear in relation to the Supreme Leader’s threats. Doesn’t say much for the young ruler when a country the size of Maryland and a smaller GDP causes a whole continent to shudder and barely anyone flinches as he threatens a nuclear strike to either South Korea or possibly Japan. It’s obvious his threats just seem like a ploy to get more aid for his people. If the little tyrant does deploy anything on Monday (his grandfather and North Korea’s founders’ birthday) markets will react suddenly and sharply.
A major buying opportunity may emerge.