I think I have a permanent headache. Can you believe what is going on? Thursday, I felt a slight bit of relief. We had a real, honest to goodness, sell off. It was the first time in 63 days that we got a 1% move in the indexes, and it was in the good guys direction. But what happened Friday?…the bad man came out and not only took back what was given to us, but took more. People say there is no manipulation going on in the markets, but when you have a market that was at all time highs, and a big sell off, then resume to all time highs again…something stinks in Denmark.
With all the world turmoil going on in the markets it is unfathomable that we can continue higher. But here we are again.
Before discussing the turmoil, I want to first let everyone know that my thoughts and prayers are with the friends and families of the downed Malaysian airline plane over the Ukraine. It was a tragedy of epic proportion. That said, Friday it was confirmed that the airline was shot down by a rocket over the embattled area of the Eastern Ukraine. Blame is being placed on the separatists who are being armed and trained by the Russian government. (Thanks Vladimir) Along with that, Israel has invaded the Gaza strip with full military armament. They say they are going there to destroy the tunnels going into Israel. (does anyone else believe that?). All this and we keep our resilient market.
Even Janet Yellen tried to help the bears this week by saying that biotech stocks were stretched in valuation. Not that she substantiated that statement. When was it the Fed’s job to do stock fundamentals? Apparently there is a new mandate I’m not aware of. There was, however, a backlash from the analysts in regards to the Fed Chair’s comments citing that the valuations were no bargain, but were in no way to any extreme.
Again, I don’t know what it will take to get an actual sell off in the markets, but it would have to be something of Biblical proportion at this point.
Last week’s economic news didn’t seem to faze the markets either. Retail sales were about half of the estimates for growth, so we are growing at a slower pace than expected on people spending. University of Michigan consumer sentiment took a dip from 83 to 81.3. Leading indicators were down to 0.3% from 0.7% the previous month. And the big slam that should have kept the markets down was the housing starts. That number missed by over 10% coming in at 893K starts vs the estimate of 1.02million. That is a massive miss that should not have been overlooked.
Coming up this week (if I don’t put a gun in my mouth and pull the trigger) we have Monday’s Chicago Fed national activity index. Doubtful it will be market changing.
Tuesday we have the consumer price index and core CPI, both showing an estimate lower than the previous month by 0.1%. The existing home sales numbers are due out with a slight increase of 110,000 over the previous month. FHFA housing price index will also come out to see they year over year gain of housing prices. The previous month was at 5.9%.
Wednesday holds no economic reports.
Thursday we have our weekly jobless claim numbers with an estimate of 308K, 6k higher than the previous week. Another report that will be looked at will be the new home sales. They estimate the number will be at 475K which is 29K lower than the previous month. Not a good direction for a growing housing market and lower interest rates.
Friday gives us the durable goods report. Last month was a disaster with a contraction of 0.9%, now showing an estimate of 0,0% growth. You have to love this growing economy when people aren’t buying.
I’m done for now. I need a very large drink, and for something to change to give me hope for the truth.