|Dow||+12.53 to 16,817.94|
|S&P 500||-2.95 to 1,961.63|
|Nasdaq||+2.18 to 4,485.90|
|10-YR Yield||-.016 to 2.257%|
|Gold||-$4.20 to $1,227.60|
|Crude Oil||-$0.29 to $80.72|
Over the weekend, we moved our corporate offices. That means I’m still settling in, and trying to remember where the break room (and my lunch!) is. I’m also basking in the glory of a commute that’s only a third as long as it used to be.
Sometimes a change in scenery or daily routine can offer you a new perspective on other things. Like the markets. And that’s what I have today.
My take: The markets haven’t gotten SAFER in the last several days, days accompanied by a fresh melt up. I believe they’ve actually gotten RISKIER. That’s not the popular sentiment on Wall Street, of course. But look at all that happened over the weekend …
Are you unlucky enough to own any Brazilian stocks? Or something like the iShares MSCI Brazil Capped ETF (EWZ)? Because it plunged almost 8 percent earlier today after Brazilian President Dilma Rousseff won re-election. That sparked fears that nothing will change with regard to economic policy there, extending a multi-quarter economic slump.
Or how about crude oil? Many investors have been viewing the commodity as an economic bellwether, a pure, market-based indicator of the health of the global economy. If that’s the case, they better get out the crash cart … because oil just dropped below $80 a barrel! That’s the lowest level since June 2012.
|Oil just fell to $80 a barrel … the lowest since June 2012.|
Then there’s the European Central Bank’s latest gambit. It concluded its large, multi-month “stress test” of the biggest European banks.
The exercise was supposed to restore confidence in the health of European banks and the euro-zone economy, in part because only 25 banks were found to have gaps in capital totaling $31.2 billion. Several institutions already filled them by raising capital during the examination process.
But after an initial pop, the markets over there rolled over … with bank stocks shedding 2 percent, 3 percent, 4 percent, or more on the day! Some leading Italian banks plunged anywhere from 5 percent to 18 percent!
Maybe it’s because all the effort the ECB is expending isn’t doing squat for the real economy! Stress tests, hundreds of billions of dollars worth of European bond purchases, and other efforts are just helping inflate asset bubbles outside of Europe’s shores, while doing virtually nothing to spark loan demand at home.
|“I’m recommending you lighten up into this rally.”|
Bottom line: We’ve surged almost 1,000 points off the low in the Dow Industrials in just a few days. But many of the same old challenges are still with us, along with a host of new ones. So from my new perspective at my new desk, I’d say the markets are much riskier here. And that’s why I’m recommending you lighten up into this rally.
So what’s your take? Do you feel better about stocks now than you did earlier in October? Or worse? Do you think we’re ready for a year-end rally? Or is this V-shaped bounce coming to an end? As always, the best place to share your view is right here.
|Our Readers Speak|
Ebola remains on the minds of many of you, given the news of new infections and the fight over quarantining of health care workers and others who might be exposed to the virus.
Reader Bob S. said: “Absolutely it makes sense for investors to have Ebola concerns. This is a very serious and deadly disease. The five previous outbreaks in rural Africa all ended when panic drove Africans to flee the towns and cities and hide in the rain forest in tents.
“If the same thing happened in an American city, much of the economy would grind to a halt. Resuming normal activities would take awhile, as well. So yes, an Ebola outbreak here would have very serious economic consequences.”
To avoid that from happening, Reader Steve had the following suggestions: “Effective quarantine of at risk areas such as Liberia, and Guinea, aided aggressively by health care workers from around the world, would work. After all, the most effective way to stop the disease is to quarantine patients in isolated rooms. At least a quarantine for a sufficient number of days of people traveling from those affected areas before we tempt fate of our general population.”
Reader Bob B. was relatively angry that hasn’t happened yet, too. He said: “Our government is being irresponsible in not closing our borders to any flight coming from the Ebola-infected countries. I just don’t understand the reasoning behind this decision.”
As for the markets overall, Reader Paul had this warning: “There is way too much irrational exuberance leading to wild up days. Going up too fast in deep water leads to the bends. I’m waiting for the stomach cramps.”
I tend to agree with you, Paul. I’m actually selling into this strength out of concern it doesn’t have staying power. If you want to share your strategies for this market, remember to stop by and comment here.
|Other Developments of the Day|
Should medical personnel and others who may have been exposed to the Ebola virus be quarantined? A handful of states, including New York and New Jersey, are arguing about it with the federal government.
I’m interested in your take here — do you think the feds or the states are right when it comes to quarantine procedure? Personally, I’d rather we err on the side of caution with such a deadly disease.
A second victim in Washington, 14-year-old Gia Soriano, died over the weekend following yet another senseless school shooting rampage. It’s a shame our kids have to do “active shooter” drills these days, and it’s ridiculous that troubled teenagers can get their hands on guns so easily.
There wasn’t much happening on the economic front today. But we did learn that pending home sales rose just 0.3 percent in September, less than the 1 percent gain economists were expecting. Purchases rose in two regions (South, Northeast) of the country, and fell in the other two (Midwest, West).
I like to save pennies (and other change) in a jar at home, then cash it in before my family goes on trips. But according to the Wall Street Journal, one single buyer is stockpiling a heck of a lot more metal!
Specifically, the paper says one entity now controls more than half the copper stored in London Metal Exchange warehouses. That percentage has risen as high as 90 percent in the past month, meaning the buyer controlled as much as $850 million in copper.
Until next time,
P.S. Martin has personally been validating the accuracy of our stock ratings model with real time data for more than a decade. Based on that data, plus testing of what he considers to be the most reasonable and prudent trading approaches, he has now built what I believe to be the ULTIMATE wealth-building strategy. Check out the details of his Ultimate Portfolio here!