Jeff’s Weekly Stock Market Commentary: Global Slowdown
Just last December, Federal Reserve Chairwoman, Janet Yellen announced that they were raising interest rates by 25 basis points because the economy was doing well. She also telegraphed (through their ‘dot plot’) that there would be additional 25 basis point increases at each of their meetings over the next two years. The market didn’t like that and bond yields actually went down on the news (making those of us invested in UST’s some money); and the stock market dropped roughly 12% between the announcement and February 11th.
Last Wednesday, the Fed blinked. They decided that the economy wasn’t strong enough to sustain another 25 basis point increase right now. Moreover, they (in the updated ‘dot plot’) signaled that the trajectory of any increases in the future would be slower and longer.
The stock market rallied on the Fed news of no interest rateon Wednesday. The stock market has been rebounding the last month ‘off the lows’ set on February 11th. Even after surging for over 3 weeks though, it is only back to where it was at the beginning of the year.
Recently, I opened up the research I normally provide to my clients during their quarterly review to a wider audience. (You can view it here) The response was amazing and the feedback from investors around the country indicates that they are not buying the Wall Street System’s story that everything is great and now is the time to buy stocks.
Jeff’s Weekly Stock Market Commentary: Could Saudi Actions Crash The US Dollar?
I have the best clients. Most of them are retired after successful careers. They understand investing and are able to differentiate between real market data versus salesman hype. They are intelligent. They are tuned into what is going on around the world and do a good job of understanding the vagaries of the markets. The more we interact the better we both become. I highly value their thoughts and concerns about the markets and investing.
I received an email from one such client yesterday. He is an international traveler that spends several months each year in emerging markets. He is a great source for what he sees ‘on the ground’. His question was about the potential impact if Saudi Arabia decoupled from the U.S. Dollar. Here is his question:
Jeff Voudrie’s Weekly Stock Market Commentary – Cyclical Downturn
The International Monetary Fund can be considered the worlds’ central bank. As such, the IMF has its finger on the pulse on economic activity globally. So when the IMF and the head of IMF, Christine Lagarde, begins to sound an alarm it behooves investors to take note:
“After more than a decade of stellar growth, emerging markets are falling headlong into new era of anemic output and market turmoil. Investors are pulling cash out in droves, fueled by an unexpectedly fast deceleration in China, the world’s second-largest economy. The IMF warns of a coming wave of corporate defaults after five years of gorging on central bank-fueled cheap credit. Emerging-market woes risk fomenting contagion in U.S. markets.”
Here are some more quotes from the article that are worthy of attention:
“…Christine Lagarde faces some of the most volatile conditions in global markets since the financial crisis, a reflection of deep-seated worries about the world economy’s course.”
In last week’s market commentary (and in my quarterly review slide deck), I mentioned that I don’t want to be a buyer of equities at all-time-highs. In my reviews I talk about how there are cycles and that the old adage ‘buy low and sell high’ is good advice.
This current market trend started in March of 2009 and has gone an extraordinary length of time without a 10% correction. So we all knew that we were due for a correction–we just didn’t know exactly when it would occur.