Home About Archives RSS Feed

@theMarket: Market Volatility Rules the Day

By Bill SchmickiBerkshires Staff
January is turning out to be a roller coaster of ups and downs for investors. Last year's fourth-quarter gains have reversed somewhat, and the future is becoming murkier as the day progresses. Hold on to your seatbelts.
 
The economic data is certainly not cooperating with the bull's scenario of slowing job growth, a fast decline in inflation, and a continued decline in bond yields. The reverse has happened. The benchmark Ten-Year Treasury bond has risen back above 4 percent. The dollar has strengthened, the week's jobless number declined, and the Consumer Price Index for December came in slightly hotter than economists were expecting. On the other hand, the December Producer Price Index was a tad cooler.
 
As such, the wildly bullish expectations that the Fed will begin to cut interest rates as early as March, and continue cutting all year, is going the way of the dodo bird. That disappointment has soured the mood and investor sentiment is beginning to turn less positive. That is probably a good sign if you are a contrarian.
 
The geopolitical scene has also failed to inspire confidence. The Houthi rebels have been stepping up their game in the Red Sea. The U.S. and its allies are responding with naval and air strikes in Yemen. This could further embroil the U.S. in the ongoing Middle Eastern conflict between Israel and Hamas, Hezbollah, and the Houthis.
 
The Ukraine/Russian conflict does not help. It seems to be stuck in a stalemate. Oil and gas prices are rising because of all this turmoil. As is precious metals. Supply chain issues are also causing pressure on prices and that hurts expectations for further declines in inflation.
 
Washington has still not figured out a way to keep the government from shutting down. The Republican-controlled House continues to shoot itself in the foot time after time. The 118th Congress is one of the most unproductive in modern history. Their members have been paired down to a razor-thin majority. Legislation has ground to a halt. At best, it appears that the most we can hope for is another continuing resolution that solves nothing and continues to leave the country hostage to a tiny, group of politicians.
 
This week, the long-awaited Securities Exchange Commission approval of 11 issuers that applied for bitcoin exchange-traded-funds (ETF) finally occurred. It looked like a classic sell-on-the-news event. After an initial pop, bitcoin lost almost 4 percent on Thursday before rebounding by the end of the day.
 
Interest seems high but the jury is still out on whether investors will embrace these ETFs with open arms. I think it will take a few weeks before things shake out. The good news for investors is there is a race to the bottom as far as fees charged for these ETFs are concerned.
 
It is the beginning of earnings season with the multicenter banks kicking off results on Friday. Investors will be focusing attention on overall results to see if the present stock market valuations are justified or not. Prepare for company misses to be penalized heavily, while beats may not be rewarded all that much given the run-up in many stocks over the last few months. Corporate guidance for future sales and earnings will be key.
 
Beginning next Wednesday, global money flows into financial markets, which have supported markets for weeks, will begin to taper off. This will have a negative impact on prices overall, regardless of asset class. Short term, I expect the markets will remain volatile with maybe one more bounce before some serious downside begins over the next few weeks.
 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

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 OPI, Inc. or a solicitation to become a client of OPI. The reader should not assume that any strategies or specific investments discussed are employed, bought, sold, or held by OPI. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct.

 

     

Support Local News

We show up at hurricanes, budget meetings, high school games, accidents, fires and community events. We show up at celebrations and tragedies and everything in between. We show up so our readers can learn about pivotal events that affect their communities and their lives.

How important is local news to you? You can support independent, unbiased journalism and help iBerkshires grow for as a little as the cost of a cup of coffee a week.

News Headlines
Clark Art Presents Thematic Tour on British Art
Pittsfield Street Improvement Project: April 18-19
Pittsfield Woman Dies After Being Rescued From Structure Fire
Man Charged With Child Porn Posts $100K Bail
Suspect in High-Speed Adams Chase Arrested
BAAMS' Monthly Studio 9 Series Features Mino Cinelu
Arbor Day Celebrations Planned in Pittsfield
Low-Cost School Vacation Events in the Berkshires
Baseball in the Berkshires Exhibit Highlights Black, Women's Teams
Car Seat Installation and Inspection Event In Pittsfield
 
 


Categories:
@theMarket (482)
Independent Investor (451)
Retired Investor (185)
Archives:
April 2024 (2)
April 2023 (4)
March 2024 (7)
February 2024 (8)
January 2024 (8)
December 2023 (9)
November 2023 (5)
October 2023 (7)
September 2023 (8)
August 2023 (7)
July 2023 (7)
June 2023 (8)
May 2023 (8)
Tags:
Euro Congress Selloff Debt Election Greece Retirement Banks Commodities Currency Jobs Economy Stocks Pullback Deficit Markets Europe Oil Stock Market Employment Metals Taxes Rally Bailout Fiscal Cliff Interest Rates Recession Debt Ceiling Energy Japan Europe Crisis Banking Federal Reserve Stimulus
Popular Entries:
The Independent Investor: Don't Fight the Fed
Independent Investor: Europe's Banking Crisis
@theMarket: Let the Good Times Roll
The Independent Investor: Japan — The Sun Is Beginning to Rise
Independent Investor: Enough Already!
@theMarket: Let Silver Be A Lesson
Independent Investor: What To Expect After a Waterfall Decline
@theMarket: One Down, One to Go
@theMarket: 707 Days
The Independent Investor: And Now For That Deficit
Recent Entries:
@theMarket: Sticky Inflation Propels Yields Higher, Stocks Lower
The Retired Investor: Immigration Battle Facts and Fiction
@theMarket: Stocks Consolidating Near Highs Into End of First Quarter
The Retired Investor: Immigrants Getting Bad Rap on the Economic Front
@theMarket: Sticky Inflation Slows Market Advance
The Retired Investor: Eating Out Not What It Used to Be
@theMarket: Markets March to New Highs (Again)
The Retired Investor: Companies Dropping Degree Requirements
@theMarket: Tech Takes Break as Other Sectors Play Catch-up
The Retired Investor: The Economics of Taylor Swift