Weekly Update: October 20, 2014

Visible Signs of Proactive Measures

Investors have just come off the most volatile week in three years that included wild swings in the major averages, a steep correction in the oil sector, high-level anxiety of Europe sliding back into a recession, reports of ISIS about to invade Baghdad and the threat of the Ebola virus striking fear across global borders.

The week was capped with the Dow posting its second-largest gain of the year; buyers stepped in just as the S&P 500 came within a whisker of registering a 10% decline from the Sept. 18 peak of the 2,019 level, which marked the beginning of the current decline. By definition, the market has endured a four-week correction that, if contained to the lows of last week, will fall into the category of 'garden variety.'


Earnings Season is the Silver Lining

Weekly Update: October 6, 2014

The old saying of 'every cloud has a silver lining' comes to mind when describing the current investing landscape. Following a dramatic three weeks of market volatility, some of the white-knuckle sentiment associated with events in Hong Kong, Ukraine, Syria and Europe is abating. That either means there's improvement or the negative intensity is simply abating. Regardless, it's a welcome relief and couldn't come at a better time.

Last Friday's strong rally didn't erase the losses for the week, but did set the table for U.S. equity markets to make a follow-up move higher if the weekend came and went without some major geopolitical event unfurling at the seams. Conversely, the pro-democratic protests in Hong Kong subsided as students removed barricades so civil service employees could go to work amidst dwindling crowds that suggest the movement has been put on hold.


Volatility and the Rise of the Machines

Weekly Update: September 29, 2014

The month of September is living up to its long, well-documented reputation of taking investors for a roller-coaster ride. This was accentuated last week by triple-digit swings for the Dow every day of the week and then again today as ripple effects from several fluid situations trigger computer-generated buy and sell programs, with the selling more intense.

Hedge-fund chatter that the Fed is targeting a 3%-4% Fed Funds rate over the next couple of years made the rounds over the weekend, but there was no credible response by the Fed or any other newsworthy sources to shed any light on what can only be considered short-seller's rhetoric.


Looking for the Next Catalyst

Weekly Update: September 22, 2014

Coming off an action-packed week of high-priority data points, central-bank policy meetings and the biggest IPO of all time in Alibaba (BABA), markets are enduring a bit of an information-overload hangover, trading lower across the board, around the globe. The S&P 500 posted a new all-time intraday high of 2,019 on Friday, but the tone of the investing landscape became subdued late that afternoon, and it has carried over into today's session.

Fresh concerns of slower growth in China and Europe are dampening an otherwise optimistic view of the U.S. economy, partly because low interest rates and declining energy prices are stimulating consumer spending and forecasts of capital spending, and hiring by companies is increasing heading into the fourth quarter.


Big Week Ahead for Market Bulls

Weekly Update: September 15, 2014

A quick view of the economic, IPO and Fed calendars provides a clear take on how well the bullish case will be able to build on itself following a three-week period of consolidation for the major averages. The scales are tipped in favor of being long the U.S. markets as the third quarter comes to a close and earnings season approaches against a somewhat cautious tone.

For what is historically a quiet time of the year, much has transpired during the past month, from volatile geopolitical situations to a major rally in the dollar to levels not seen since July 2013. The soaring greenback is drawing capital flows from around the globe into U.S. equities and debt assets, which is providing a solid bid under both markets.


U.S. Markets Tapped as Global Safe Zone

Weekly Update: September 2, 2014

The month of August saw the S&P 500 climb 3.8%, defying its historical laggard behavior, primarily as a world awash in cash allocated capital to U.S. bond and equity assets as the de facto recipient for financial yield and growth. Strength in the U.S. dollar also acted like a magnet, drawing huge interest in the wake of geopolitical risk and uncertainty that hasn't shown any signs of abating.

The dollar index (DXY) hit a fresh 52-week high of 83.0 last Friday as the yield on the 10-year Treasury traded down to 2.33% before seeing some giveback this morning, which sent the yield back up to 2.41%. Typically against a backdrop like this, including the Russian invasion into Ukraine and the widespread violence in the Middle East, crude and gold prices would be soaring. However, quite the opposite is occurring: Crude is trading below $95 per barrel, and gold is trading below $1,270 per ounce. But, then again, the market landscape has been anything but normal.