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HomeWhat if Nobody Shows to Wall Street’s Party?
Posted by Larry Doyle on March 5th, 2010 2:48 PM |
Did Wall Street forget to send out invitations to the party going on in the equity markets, or are people merely preoccupied with other affairs to truly care as to what is happening in lower Manhattan?
In any event, I referenced the other day during my appearance on CNBC’s Street Signs that the greatest risk for the financial industry is if people choose not to play the game. In fact, I very much believe that dynamic is playing out. Why? Look at today’s price action in the equity markets. (more…)
February 20, 2010: Market Week in Review
Posted by Larry Doyle on February 20th, 2010 7:54 AM |
Markets rebounded strongly this week. In the process, most of the major market equity averages, commodity indices, and bond ETFs recouped January’s declines and are now back close to their December 31, 2009 levels. What happened?
Welcome to our Sense on Cents Week in Review where I provide a streamlined recap of the major economic data and news, along with month-to-date market returns.
ECONOMIC DATA
A lot of news and data this week. Some good. Some not so good. Let’s dive right in. (more…)
January 2010 Market Review
Posted by Larry Doyle on January 30th, 2010 10:49 AM |
As January goes, so goes the year.
Does this adage hold water? The market direction for the year is correlated approximately 70% of the time with January’s move. I certainly would not make investment decisions based purely upon that rule of thumb. The rule did not hold in 2009 as major equity averages were down 8% last January. That said, 2009 was anything but a normal year given the massive economic and market supports implemented by Uncle Sam.
What rule of thumb would I recommend? Read and review Sense on Cents regularly to most effectively navigate the economic landscape. On that note, let’s review the market moves for January. The figures provided are month end statistics for the respective markets, then month-to-date and year-to-date returns. (more…)
January 23, 2010: Week in Review
Posted by Larry Doyle on January 23rd, 2010 7:15 AM |
From Massachusetts to Washington and from Wall Street to China, fireworks were flying this week across our global economic landscape. While the political focus in America is grabbing center stage, make no mistake, the issues driving the politics are largely economic.
Welcome to our Sense on Cents Week in Review where I provide a streamlined recap of the major economic news and the month-to-date market moves. Pack lightly as we have much ground to cover. That said, let’s enjoy the journey as the twists and turns along our landscape are truly fascinating and historic in nature. Let’s navigate.
ECONOMIC DATA:
1. Housing Starts: a disappointing report as starts fell 4% after an upward revision to a 10.7% increase in the prior month. I still take all the housing numbers with a pound of salt knowing that delinquencies and defaults continue to move higher. (more…)
January 9, 2010: Week in Review
Posted by Larry Doyle on January 9th, 2010 11:37 AM |
The economy continues to send very mixed signals. The market screams like a scolded dog. The more things change, the more they stay the same. Welcome to our weekly Sense on Cents Week in Review. I will provide a streamlined recap of the major economic news and the month-to-date market moves. Let’s navigate.
ECONOMIC DATA: (more…)
Wall Street Economic and Market Outlook 2010
Posted by Larry Doyle on January 6th, 2010 12:06 PM |
The New Year brings us the traditional economic and market outlooks from Wall Street firms. High five to a loyal Sense on Cents reader for sharing this recap collated by Birinyi Associates. (Click on image to access full report)
>> LD’s SUMMARY
The overall average calls across the economic and market landscape are as follows:
GDP: +3.1% increase
S&P 500 close at year end 2010: 1222, a 9.6% increase
S&P 500 earnings: $76/share
Oil: $80/barrel, effectively flat on the year
Dollar/Euro: 1.45, effectively flat on the year
The overall outlook does project that analysts believe better opportunities for growth lie outside the United States.
With all due respect to the analysts making these calls, there are no major market calls and especially outliers in this report. Why? Analysts know they have more downside in being bold and wrong. Additionally, the analysts are ultimately a public face for Wall Street salespeople trying to collect assets and sell products. What environment characteristics are most conducive for those pursuits? Low volatility with positive bias and trend. What have the analysts provided? Exactly that.
Wall Street is truly an oligopoly. Group think and coordinated — if not collusive — pricing and projections are simply how the game is played.
LD
Why Doesn’t the Market Move?
Posted by Larry Doyle on January 4th, 2010 2:55 PM |
Have you ever wondered why the market often times makes a very early move one way or the other then just seems to sit all day? Take today, for instance. The market moved solidly higher on the open, but has sat at up 160 points all day. Why? Let’s look at a 5 minute graph of today’s price movement for the Dow Jones Industrial Average:
The market has traded in a 10 to 15 point range for the better part of the last 4 hours. Why isn’t it moving? A lack of overall trading volume and accompanying conviction on the part of many investors. With fewer market participants involved, volatility diminishes, and the market sits.
Is this good, bad, right, wrong? It’s none of the above. This is merely the market.
All other things being equal, it is healthier for a market to trade up and down on heavier volume as that indicates a stronger conviction and develops a stronger foundation. One may agree or disagree with the price action of a market. That said, a market will do whatever it may want. That is, “the market is the market.”
LD
2009 Market Review
Posted by Larry Doyle on January 2nd, 2010 11:34 AM |
Time.
More than any period of the last thirty years, I think it is imperative to view the global economy and market prospects with a longer time horizon. Those in Washington and on Wall Street have never displayed the discipline nor the inclination to truly take this approach. I strongly encourage those reading Sense on Cents to view your personal situation and that of our global economy and market with a longer time horizon. Why?
I personally believe our global economy remains in the relatively early stages of a significant fundamental shift. Recall that the shadow banking system provided 40-45% of the credit to our domestic economy. That shadow banking system remains a mere shadow of itself. Pardon the pun.
Try as he might, Uncle Sam can not fill that credit void forever. Credit demand and credit supply remain overwhelmed by the mountain of debts at the federal, municipal, and personal levels. The bad debt embedded in toxic assets on Wall Street also remains. While selected segments of our private market can and will grow, the economy as a whole remains constrained by the aforementioned debts. The price to service these debts (that is, the prevailing level of interest rates) will likely move higher.
Can we experience a confluence of higher interest rates along with a general decline in wages and prices, that is the core of deflation? That double whammy scares the hell out of Fed Chair Ben Bernanke. These questions and prospects will not be answered anytime real soon. They will take time.
What is an individual to do? Continue to pay down debt and be disciplined in maintaining a diversified investment portfolio. On that note, let’s look back at 2009 so we can most effectively look forward to 2010 and navigate the economic landscape.
The figures I provide are year-end 2009 relative to year-end 2008, and the returns for the year. (more…)
December 19, 2009: Month to Date Market Review
Posted by Larry Doyle on December 19th, 2009 11:26 AM |
Our economic landscape is anything but normal. The fits and starts, ups and downs, hills and valleys remain challenging and all assertions to the contrary are not about to change anytime soon. Those in Washington continue to try to put a happy face on our economy. Those on Wall Street revel in the easy money and try to project a populist image. But those on Main Street are paying the price in terms of navigating the real challenges of our economy. On that note, welcome to Sense on Cents. Let’s move on to our weekly review.
With most eyes fixated on problems here at home, the real issues in the global markets occurred in the Euro-zone. Is Greece close to a sovereign default? Would that create a chain reaction? The Euro continued to give ground this week and our greenback benefited in the process. Given the negative correlation between our greenback and many sectors of the equity, commodity, and bond markets, volatility remains a concern and risks remain high as we go into year end.
We continued to see a semblance of this phenomena play out again this week. Will it continue? Watch the U.S. Dollar Index and expect that it will continue to be negatively correlated with the markets.
Let’s navigate. Prior to reviewing the month to date market returns, I’ll address economic data released this week. (more…)
