Monday, September 01, 2014 02:32pm
North Adams, MA now: 82 °   
Send news, tips, press releases and questions to info@iBerkshires.com
The Berkshires online guide to events, news and Berkshire County community information.
SIGN IN | REGISTER NOW   

Home About Archives RSS Feed
@theMarket: Europe Downgrades Hit Markets
By Bill Schmick On: 07:41PM / Friday January 13, 2012
Important
0
Interesting
1
Funny
0
Awesome
0
Infuriating
0
Ridiculous
0
After a week of slowly grinding higher on exceptionally low volume, the markets swooned on Friday. Europe, once again, was responsible.

It was almost comical to watch the talking heads this week as they tried to make a case that the U.S. markets were decoupling from the troubles in Europe. They highlighted the increasingly positive economic data, the possibility of quarterly earnings surprises and the hope that the Fed was preparing for another round of quantitative easing.

My take is that Europe has a longer holiday season than we do. Their movers and shakers just got back to work this week. We haven't decoupled. There was simply an absence of market making news until this week.

All of that decoupling talk disappeared on Friday as a rumor surfaced that credit rating agency Standard & Poor's was ready to downgrade a slew of European countries this weekend. At the same time, JPMorgan's revenues disappointed the market in their earnings announcement, sending the entire financial sector into a tailspin. Retail sales for December (as I predicted) also disappointed the markets. The holiday season failed to live up to retailers' expectations triggering fears that future economic growth was in jeopardy.

My advice to readers is to ignore all these one-off events. The simple truth is that we have benefited from A) The Santa Claus Rally and B) the January Effect. In my last few columns, I explained both and predicted the markets would rally as a result. Both A and B came off like clockwork and are now about over, leaving the markets vulnerable to a pullback.

I'm not looking for anything disastrous to develop, outside of a normal two-steps-forward, one-step-back kind of decline. There are too many positive developments for me to become overly bearish.

Both Italy and Spain managed to sell 17 billion worth of sovereign debt ($21.5 billion) this week without too much trouble. That was a vast improvement over last month when few players were willing to even look at buying bonds from these countries. The European Central Bank left rates unchanged, leaving the door open for possible rate cuts in the future. Even Greece, the bad boy of Europe, is stumbling towards a debt deal in their typical on-again, off-again fashion.

There is also a lot of talk about the possibility that the Fed will launch QE 3 sometime in the next few months. This is partially a result of some dovish-sounding speeches from several Fed members lately. I have my doubts. As long as U.S. economic data continues to improve, I don't think the Fed sees the need for additional monetary stimulus right now.

Of course, we are in an election year and sitting presidents in the past have been known to "lean" on the chairman of the Federal Reserve to goose the economy as November approaches. I think it is still too soon for that kind of monetary monkey business before the elections. But it does help buoy the mood of investors so we will put that in the plus column.

In summary, the markets will pull back and then go higher. That will be a trend I expect will continue for the next several months. I'm not looking for big gains, just a general trending higher by the indexes, interrupted by pullbacks on a periodic basis. The upside could lift the S&P 500 Index to the 1,350 level but from here that's no more than a 5 percent gain from here. As such, we will keep one foot in dividend paying stocks and the other in the fixed income market. In other words stay defensive.

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at (toll free) or email him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.



0 Comments
     
News Headlines
Larabee, Giorgi Honored With 'Frankie' Awards
Former Finance Director Returns to Williamstown as Pastor
Armory Takes Lead in Torchia Softball League Final
Legislative Q&A: State Rep. William 'Smitty' Pignatelli
MCLA Women's Soccer Ties; Tennis, Volleyball, Men's Soccer Win
Holiday Hours: Labor Day
Clarksburg Weighing Bridge Plans, Preparing Special Town Meeting
MCLA Men's Soccer Rolls in Opener
'Sin City: A Dame to Kill For': Graphic, Indeed
Register now for Ys Superhero 5K Challenge on Sept. 13
Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (143)
Independent Investor (194)
Archives:
August 2014 (7)
July 2014 (2)
June 2014 (6)
May 2014 (9)
April 2014 (8)
March 2014 (6)
February 2014 (6)
January 2014 (7)
December 2013 (8)
November 2013 (7)
October 2013 (6)
September 2013 (6)
Tags:
Bailout Stock Market Commodities Jobs Congress Europe Debt Stimulus Euro Banks Interest Rates Greece Deficit Japan Election Taxes Debt Ceiling Stocks Fed Fiscal Cliff Metals Crisis Currency Pullback Federal Reserve Markets Energy Europe Retirement Economy Recession Housing Oil Rally Selloff
Popular Entries:
The Independent Investor: Understanding the Foreclosure Scandal
The Independent Investor: Don't Fight the Fed
The Independent Investor: Does Cash Mean Currencies?
@theMarket: QE II Supports the Markets
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: How Will Wall Street II Play on Main Street?
The Independent Investor: Will the Municipal Bond Massacre Continue?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
Recent Entries:
@theMarket: What's Up With Bonds?
The Independent Investor: Baby Boomers and Retiremen
@theMarket: Labor on Their Mind
The Independent Investor: Financing ISIS
@theMarket: Geopolitical Risk Trumps Economic Growth
The Independent Investor: Beware the Russian Bear
The Independent Investor: Why Some Corporations Are Leaving America
The Independent Investor: How Much Is Too Much to Spend in Retirement?
The Independent Investor: The Fed Turns Off the Spigot
The Independent Investor: Should You Pay Off Mortgage Before Retiring?


View All
Friday Soccer Scrimfest
Friday afternoon girls soccer 'Scrimfest' at Drury High...
Pignatelli Campaign Kickoff...
State Rep. William "Smitty" Pignatelli held a kick off...
Down Street Art
People flooded main street to see the new art installations...
Western Mass Beer Fest 2014
Hundreds turned out for the 9th annual Western Mass Beer...
High School Soccer
High School soccer practice got under way on Thursday.
Motorama
Hundreds of cars, trucks, motorcycles, snowmobiles and...
Chamber Nite @MountainOne
A who's who was at the MountainOne-hosted Berkshire Chamber...
Third Thursday Aug. 21, 2014
The August Third Thursday event in Pittsfield included a...
High School Football
High School football practice got under way on Monday.
Giorgi League Semis: B&B vs...
Burr and Burton held a steady lead over Bennington, Vt.'s,...
Giorgi League Semis: Drury vs...
Alex Heck scored 19 points to lead the Drury boys...
Mill Children Opening
The 5 Hoosac Street Gallery held its grand opening Friday...
Downtown Celebration 2014
North Adams held its annual street fair on Main Street on...
Worcester Bravehearts vs...
Key at bat helps the Worcester Bravehearts defeat the...
9th Annual Rock, Rattle &...
This year's theme is "Living in Harmony, Fulfilling Our...
Softball Series: Berkshire...
Friday Soccer Scrimfest
Friday afternoon girls soccer 'Scrimfest' at Drury High...
Pignatelli Campaign Kickoff...
State Rep. William "Smitty" Pignatelli held a kick off...
Down Street Art
People flooded main street to see the new art installations...
Western Mass Beer Fest 2014
Hundreds turned out for the 9th annual Western Mass Beer...
High School Soccer
High School soccer practice got under way on Thursday.
| Home | A & E | Business | Community News | Dining | Real Estate | Schools | Sports & Outdoors | Berkshires Weather | Weddings
Advertise | Recommend This Page | Help Contact Us | Privacy Policy| User Agreement
iBerkshires.com is owned and operated by: Boxcar Media 102 Main Street, North Adams, MA 01247 -- T. 413-663-3384 F.413-664-4251
© 2000 Boxcar Media LLC - All rights reserved