Monday, March 02, 2015 12:02am
North Adams, MA now: 21 °   
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
Williamstown Economic Development Panel Hears from North Adams Planner
New Business Offers Organic Products From Berkshires & Beyond
Battalion Falls at Home, Needs Miracle to Finish Fourth
Commission on Status of Women, Groups, Share Concerns With Lawmakers
McCann Senior Praised For Her Achievements
'Still Alice': A Sadness to Remember
Berkshire Reps Rise In Legislative Ranks
Clarksburg Nomination Papers Available Monday
Berkshire Battalion Hosting 'Hometown Heroes'
Pittsfield Doctor Honored by Berkshire District Medical Society

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 (161)
Independent Investor (218)
Archives:
February 2015 (7)
January 2015 (9)
December 2014 (7)
November 2014 (4)
October 2014 (9)
September 2014 (5)
August 2014 (7)
July 2014 (2)
June 2014 (6)
May 2014 (9)
April 2014 (8)
March 2014 (6)
Tags:
Oil Selloff Rally Markets Debt Greece Federal Reserve Japan Deficit Debt Ceiling Election Stock Market Jobs Fiscal Cliff Housing Banks Euro Retirement Recession Economy Stimulus Congress Stocks Bailout Taxes Energy Commodities Crisis Fed Europe Pullback Europe Interest Rates Metals Currency
Popular Entries:
The Independent Investor: Don't Fight the Fed
The Independent Investor: Understanding the Foreclosure Scandal
@theMarket: QE II Supports the Markets
The Independent Investor: Does Cash Mean Currencies?
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: Will the Municipal Bond Massacre Continue?
The Independent Investor: How Will Wall Street II Play on Main Street?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
Recent Entries:
@The Market: Full Steam Ahead
The Independent Investor: New Fiduciary Rule Would Benefit All of Us
The Independent Investor: How to Make the Most Out of Social Security
@theMarket: A Race to the Bottom
The Independent Investor: The Grecian Drama
@theMarket: The Labor Market Is on Fire
The Independent Investor: Joint Business Is Jumping
The Independent Investor: College Savings Accounts Are Not Risk-Free
@theMarket: More Stimuli Equal Higher Markets
The Independent Investor: The European Central Bank Delivers


View All
Thunderbolt/Thunderfest 2015
The Thunderbolt Ski Race held its 80th anniversary run on...
Girls BB: Wahconah vs Hoosac...
No.1 Hoosac is heading back to the Cage as they beat No.9...
10X10 Art Party 2015
The 10X10 Festival's Real Art Party fundraiser, organized...
Berkshire Chamber Nite @...
Berkshire Chamber night on Wednesday at Mingo's in North...
Boys BB: Renaissance vs Drury
For Drury senior Justin Girard, the 63-61 quarter-final win...
Boys BB: Mount Greylock vs...
The Hoosac Valley boys basketball team got enough...
Boys BB: Quabbin vs...
Jerry McDonough scored 15 points, and Scott Steinman added...
Girls BB: Lee vs Mount...
Karli Retzel hit a 3-pointer and went 2-for-2 at the foul...
Boys Hockey: Wahconah vs...
The No. 5 Warriors won over No. 4 Belchertown 2-0 Tuesday...
Boys Hockey: Mt Everett vs...
Amherst No. 3 seed eliminated No. 6 Mount Everett 3-0...
Boys BB: Holyoke Catholic vs...
Monday evening, as the No. 5 Lenox basketball team was...
Congressman Neal Tours...
U.S. Rep. Richard Neal toured Unistress, Modern Mold & Tool...
Winterfest 2015
Chowder, wagon rides and ice sculptures attracted residents...
State Voc Semifinals
FINAL: Franklin Tech advances to State Voc Final with 63-44...
Berkshire County Bowling...
Lee won the Berkshire County Bowling Title over Drury 3...
Boys BB: Lenox @ Greylock
The Lenox boys basketball team defeated Mount Greylock,...
Thunderbolt/Thunderfest 2015
The Thunderbolt Ski Race held its 80th anniversary run on...
Girls BB: Wahconah vs Hoosac...
No.1 Hoosac is heading back to the Cage as they beat No.9...
10X10 Art Party 2015
The 10X10 Festival's Real Art Party fundraiser, organized...
Berkshire Chamber Nite @...
Berkshire Chamber night on Wednesday at Mingo's in North...
Boys BB: Renaissance vs Drury
For Drury senior Justin Girard, the 63-61 quarter-final win...
| 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