Over the weekend, Russian armed forces comprised of 150,000 troops and 900 tanks massed along the eastern Ukrainian border in what has been described by the Russian government as 'military exercises.' That official statement went out the window this morning at 10 a.m. ET, when headlines crossed the tape that, according to the Ukrainian defense minister, the Russian fleet has given Ukrainian forces in Crimea until 10 p.m. ET to surrender or 'face a storm' (translated: forced invasion).
The fact that in the first hour of trading the Dow, S&P and Nasdaq were all lower by just 1%-1.5% is remarkable. Clearly, the steep losses overnight in Europe and Asia are not being carried over to U.S. markets and instead are actually cushioning the sell-side pressure as capital flows aggressively out of Europe, Asia and emerging markets into our markets, which are considered to be a much safer haven.Read
Stocks are starting the week out on a highly bullish note; the S&P 500 crossed 1,850 for the first time, while the Dow and Nasdaq also pushed higher to support a broad advance. This comes after a G20 meeting over the weekend in which finance officials called for backing from central banks and private-sector infrastructure spending to spur world growth, which reassured emerging markets and set the tone for a positive open.
Additionally, the sudden collapse of the Ukrainian government and the U.S./EU bailout offered to that country also made for an event-filled weekend. That's all the bulls needed to hear to take the major averages north from the opening bell and extend the current rally to over 120 points for the S&P 500 in just two weeks. That index is registering a 6.6% gain from the 1,740 low from which the current rally began.Read
U.S. markets have kept up the bullish tone following international markets trading higher late last week, bolstered by improving economic growth across the Atlantic. European markets gained more than 0.5% Friday, led by higher-risk countries such as Italy and Spain. The optimism about a brighter European outlook spilled over to Asian markets that were mostly positive, with the exception of a further drop in Tokyo.
Gross domestic product in the eurozone expanded by 0.3% in the fourth quarter, better than the 0.2% expected by economists. In addition, trade numbers were strong for the month of December. Stocks fell in late January and early this month amid worries that the global economy was slowing, only to rebound sharply in the last seven sessions.Read
In last night's Super Bowl, the drubbing of the Denver Broncos by the Seattle Seahawks reminded me of how global markets are defending themselves against the threat posed by emerging-market currencies to equity markets. Thus far, the stock market has picked up in February where it left off in January. Cause and effect relationships are open for interpretation, yet there is enough going on right now -- or perhaps I should say not going on -- that has kept buyers on the sidelines out of concern for a spillover effect into the U.S. stock market.
The rush of capital into the dollar, yen and Swiss franc resembles that of a buffalo stampede. The current correction started with China's preliminary PMI reading of about two weeks ago, showing some nominal slippage. Last night, it was reported that China's official manufacturing PMI fell to a six-month low of 50.5 in January from 51 in December, while the non-manufacturing print slipped to the lowest level since December 2008, falling to 53.4 from 54.6.Read
At a time when most market observers and investors were focused on corporate earnings and the pace of the Fed's tapering, several events outside the United States combined to trigger a wave of selling late last week. It clipped 3% off the major averages in a broad-based sell-off that left open the possibility of further spreading of fear over the weekend. And sure enough, the decline continued into Monday's session ahead of the two-day January Fed meeting.
Big losses in emerging-market currencies and those equity markets were beset by concerns of capital outflows associated with Fed tapering and China's lower-than-expected PMI reading, which showed manufacturing contracting for the first time in several quarters and rattled short-term sentiment that previously had been neutral to bullish. Now that big inflows of central-bank stimulus and China's phenomenal growth are receding, investors are pulling back from those economies that are most likely to be impacted by these forces.Read
With only a little more than a week left in the month, investors are still waiting for the 'January Effect' to materialize in the form of a significant up move for the major averages. So far, the expected rally that would extend December's big gains has been elusive on a broad market basis, although there have been some significant gains in specific sectors.
Big-cap biotech, Internet, financial, solar power, digital health care and airline stocks have been pushing higher, many of which are posting new highs. As earnings season reveals the true nature of business conditions, it's vividly clear that Wall Street not only wants companies to beat estimates, but will only reward those stocks that provide upward revenue and profit guidance as well.Read
For almost a decade, Bryan has brought his expertise on high-yielding investments to the Cash Machine service. His main goal is to help income investors craft a portfolio that will pay a reliable income even during the worst of times. Read