Thursday, October 02, 2014 10:29am
North Adams, MA now: 57 °   
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: Markets Held Hostage by Congress
By: Bill Schmick On: 10:35AM / Saturday December 11, 2010
Important
0
Interesting
0
Funny
0
Awesome
0
Infuriating
0
Ridiculous
0

Although the week started off on a positive note with the president announcing a potential deal on extending the Bush tax cuts, by the end of the week investors grew a bit more cautious. All eyes were on the politicians in Washington. As the spotlight falls on this lame-duck Congress, our elected officials are wringing as much publicity as possible from this opportunity before seriously negotiating this tax extension.

On Thursday, it was the Democrats' turn to huff and puff about the deal their president cut with Republicans to prevent a huge tax hike on all Americans on Jan. 1. Democratic congressmen claimed that extending the cuts for the wealthy were against their ideals, as if wealthy taxpayers were somehow no longer Americans. But we are told not to fear since just about every forecaster in the country believes that despite this political grandstanding, a bill to extend the tax cuts will pass by Christmas. I certainly hope that will happen but I can't help feeling a disturbing sense of deja vu around the issue.

Do you remember the congressional antics during the $700 billion financial bail out plan when it was first brought up for a vote in September 2008? Preceding that vote, most pundits on Wall Street couldn't imagine it would fail to pass. After all, the financial system was disintegrating, world stock markets were melting down and no one out there had any other plan to stop the world's descent into financial oblivion. Yet, Congress failed to pass the measure. The Dow plunged 7 percent that day and continued to fall until those dimwits in Washington finally realized that regardless of their ideals, it was a bailout or the end of line for all of us.

The point is that we better get a bill passed by the end of next week or we could see a quick 50-75 point sell-off in the S&P 500 Index with corresponding drops in the other indexes.

There has been a spate of good news this week from a surprise drop in the U.S. trade deficit to continued improvement in the initial jobless claims and yet the markets have responded half-heartedly to this good news. Instead, they are hanging on every word that the politicians utter.

Meanwhile, over in the bond market, interest rates on intermediate and long-term U.S. Treasury bonds are beginning to rise. That has also contributed to the market's worries. I have written on several occasions that we were in the ninth inning of this bull market in bonds and if you are not already out of those instruments you should really consider doing so and now. This rise in rates is also attracting new interest in the dollar, which is bearish for commodities, but it is a bullish sign that the economy is growing. As a result, increasing numbers of investors are gravitating toward the stock markets.

It is no surprise that most of the brokers on Wall Street are ratcheting up their forecasts for the S&P 500 for next year. This week most strategists have raised their target to the 1,425-1,450 level. That would be a whopping 20 percent increase from today's levels. I have no problem with those forecasts because I believe they are entirely doable.

What may change are the sectors and types of stocks that lead the markets during the coming year. Large cap stocks, for example, have lagged the market since this rally began in March 2009. There are some early signs that investors may be rotating into this space. Will commodities continue to outperform? I don't think so, at least over the next few months.

Silver, gold, oil and other commodities are closing in on my price targets (see my column "Hi Yo Silver"). They are due for a healthy (and long overdue) consolidation, possibly on the back of a rising dollar.

In any case, the markets are going higher with or without a sudden, Washington-inspired dip. For long-term investors, that's all you need to know.

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 1-888-232-6072 (toll free) or e-mail him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.



Tags: stock market, tax cuts      
News Headlines
Pittsfield To Examine Privatizing Water Treatment
Clarksburg Planners Advise 'Stop Work' on Golf Course
Electric Rate Increase Tamed By Lenox's Group Purchasing
Cheshire Asks for Verizon Pole Cleanup, Hears Park Update
North Adams Vigil Celebrates Addiction Recovery, Mourns Loss
Longtime MCLA Staffer Degen Retiring
Does Your Plan Need A Makeover?
Girl Scouts to Host 'Geek Is Glam' STEM Expo
Williamstown Elementary Clothing Sale Benefits Classrooms
North Adams Happenings: Oct. 1-7
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 (145)
Independent Investor (197)
Archives:
September 2014 (5)
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)
Tags:
Europe Recession Deficit Metals Stocks Euro Europe Oil Energy Debt Commodities Fiscal Cliff Jobs Crisis Economy Banks Federal Reserve Election Currency Fed Debt Ceiling Markets Rally Bailout Housing Retirement Stock Market Japan Stimulus Taxes Pullback Interest Rates Greece Congress 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: Wash, Rinse and Repeat
The Independent Investor: Is Wall Street Responsible for Climate Change?
@theMarket: Waiting on the Fed
The Independent Investor: The United States of Scotland?
The Independent Investor: Europe Follows the U.S. lead
@theMarket: What's Up With Bonds?
The Independent Investor: Baby Boomers and Retirement
@theMarket: Labor on Their Mind
The Independent Investor: Financing ISIS
@theMarket: Geopolitical Risk Trumps Economic Growth


View All
Soccer: Pathfinder vs McCann
The McCann Tech boys soccer team defeated Pathfinder, 6-0,...
Golf: Taconic vs Drury
Taconic defeated Drury on Wednesday at Stamford Valley Golf...
Soccer:Taconic vs Lee
Lee won 6-2 over Taconic Tuesday afternoon. Submitting...
Soccer: Lenox vs Mount...
Dan Flynn scored both his goals after half-time to lead...
Girls Soccer: Wahconah vs...
Monday afternoon girls soccer game between Wahconah and...
Golf: Drury vs Pittsfield
Nick Boulger carded a 40 to lead the Drury High School golf...
Bike Night 2014
Motorcycles packed into the Visitor Center parking lot...
Girls Soccer: Pittsfield vs...
Trinity Cookis tallied three of Pittsfield’s seven goals...
Soccer: PHS vs Taconic
Pittsfield boys, top Taconic 5-0
Football: Smith Voc vs McCann...
McCann over Smith Voc. 53-0.
Soccer: St. Joe's vs Taconic
St. Joe 1, Taconic 1: 1st half: Tac - Ryan Abel (Colin...
McCann Tech Golf
The McCann Tech golf team dropped a 19-5 decision to...
Girls Soccer: Hoosac vs Mt....
Rand made two of her six saves in the last six minutes, and...
Berkshire Works Career Fair...
The annual Berkshire Works Career Fair connected hundreds...
Soccer: Mount Everett vs...
Bradley Lupiani scored twice to lead the Mount Everett boys...
Cross Country at Wahconah
Boys:Wahconah beat Hoosac Valley 28-31; Lenox beat Hoosac...
Soccer: Pathfinder vs McCann
The McCann Tech boys soccer team defeated Pathfinder, 6-0,...
Golf: Taconic vs Drury
Taconic defeated Drury on Wednesday at Stamford Valley Golf...
Soccer:Taconic vs Lee
Lee won 6-2 over Taconic Tuesday afternoon. Submitting...
Soccer: Lenox vs Mount...
Dan Flynn scored both his goals after half-time to lead...
Girls Soccer: Wahconah vs...
Monday afternoon girls soccer game between Wahconah and...
| 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