Broader Market Rallies Right Up a "Wall of Worry"--Weekly Investor Thread March 22, 2015

Weekly investment & finance thread ^ | Mar 22, 2015 | Freeper Investors

[expat_panama]

Prices in both precious metals and stocks are booming again:  metals are soaring as if they're looking for higher bases and stock indexes are within a couple percentage points of all time highs.  The good news is that this time the experts show no sign of confusion as to what's going on and they've all decided what we need to do.  It's all because of the Fed, international tensions, and the NCAA. The bad news is that each expert's saying something different. 

 

Here are a few samples:

 

(excerpt from)  Stocks are likely to struggle during March Madness ...Because March Madness begins next week, you might want to stay out of the stock market until it ends April 6. Come again? What does the NCAA men’s college basketball championship have to do with the stock market? More than you think: Believe it or not, stocks more often than not produce below-average returns during widely followed sports tournaments. Last year’s March Madness was a case in point. Despite an overall positive year for equities, the S&P 500 fell 1.5% between the opening round of the 2014 NCAA championship and the final game. A rigorous study that appeared in the August 2007 issue of the prestigious Journal of Finance suggests that last year’s experience was not a fluke. The study, “Sports Sentiment and Stock Returns,” was conducted by finance professors... [snip] By the way, the non-sports fanatics among you shouldn’t become too holier than thou because of the lunacy of sports hysteria.The relationship between the stock market and investor mood extends well beyond sports. Just take the move to Daylight Saving Time, which took place this past weekend. Another academic study, which appeared in the September 2000 issue of the American Economic Review, found that the stock market’s returns are significantly below normal, on average, following shifts to Daylight Saving Time. To explain those results, the authors theorized: “We have all struggled through a day after a poor night’s sleep, weighed down by weariness, fighting lethargy and perhaps even facing despondency.” The bottom line: Take some (money) chips off the table for the next couple of weeks, and replace them with some (corn) chips while you watch the tournament.		(excerpt from) As Central Banks Battle, Will Global Economy Suffer? As Central Banks Battle, Will Global Economy Suffer? Monetary Policy: A battle is taking shape between our Federal Reserve, which wants to raise rates, and Europe and Japan, which show no signs of ending their easy-money ways. The split threatens the world economy. Since the financial crisis ended in 2009, the world's central banks have experimented with monetary policy like mad scientists in a bad horror movie. Actually, Japan started it 14 years ago, in the middle of a seemingly endless economic slump and deflation, by doing what it called Quantitative Easing (QE) — buying bonds with money printed by the central bank to push down long-term interest rates and boost investment. By 2010, it was actually buying corporate stock on the open market — something unheard of at the time. After the financial crisis, the U.S. Fed cut interest rates to zero — also unprecedented — and created its own Japan-style QE program that added $4 trillion to the balance sheet. Then Europe's central bank slashed rates... [snip] .... Japan and Europe are still slumping. The U.S. recovery and expansion are the worst since the Great Depression. And while stock markets and corporate bond markets appear to have benefited from these moves, incomes have lagged and job growth has been slow. Now the U.S. is poised to go its own way, raising interest rates and ending quantitative easing. The European Central Bank, however, is still printing money like crazy, driving the euro down and the dollar up, while Japan continues to pump up its stock market and weaken its yen to stave off deflation... [snip] ...The soaring dollar and the crashing euro mean eurozone governments and companies that were used to borrowing cheap U.S. dollars at near-zero interest rates now could face major repayment difficulties, and even defaults, as U.S. rates rise and the dollar soars further.
Also: Investors eye data as stocks approach records U.S. multinationals set to face much more pain from strong dollar Investors Must Price Low Rates For a Long Time - John Waggoner, USAT As Central Banks Fight,Will Global Economy Suffer? - Editorial, Investor's Powerful Market Reversal Was All About Dots - Doug Kass, Kass's Corner What Yellen Watches As She Contemplates Rates - Steve Matthews, BBW Gamblers lost a bundle on NCAA first round		This is the thread where folks swap ideas on savings and investment --here's a list of popular investing links that freepers have posted here and tomorrow morning we'll go on with our-- Open invitation continues always for idea-input for the thread, this being a joint effort works well.   Keywords: financial, WallStreet, stockmarket, economy.

[expat_panama]

...centrally planned economies like America...

What the heck are we talking about here, are we saying America's economy is "centrally planned" because it comes w/ national money and congress is empowered to "regulate the Value thereof"?

[expat_panama]

don’t foresee a rate hike this year. The economy is sputtering

The economy can get flushed down the pooper but if we get inflation the Fed will raise rates.  So far (imho) we're reasonably clear from that risk but just 3 days after I said no inflation the CPI came out w/ inflation (post # 23). 

 

 

Just in:  the GDP "Gross domestic purchases price index" is -0.1% below the previous quarter.  We got deflation to the tune of about a half %/year.  Forget the rate hikes.

[1010RD]

What do you call 10 people setting interest rates for an entire nation? They’re centrally planning an economy with all the pitfalls that brings. I’m not an anti-Fed nut. Look at the history. They miss calls all the time. We’re in this mess due to low interest rates. That’s the facts, Pete.

I don’t discount government’s anti-commerce stance. From the local to the federal level government has made a hash of the economy. Look at the Long Depression for proof that you don’t need a Fed or a government intervention to get out of a credit crunch.

[1010RD]

That’s what I am seeing too. Chicago RE market is very, very soft. I suspect that local Democrat policies are a big part of the problem.

If we do get inflation it will be stagflation.

[expat_panama]

What do you call 10 people setting interest rates for an entire nation?

That I'd have to call it "something that doesn't happen."  What does happen is that congress regulates the value of U.S. money by hiring 10 people to control the money supply by tweaking the rates charged for the $50B that banks borrow for overnight loans.  Meanwhile, the rest of us Americans are loaning a thousand times that much to each other without any "contral planning" involved whatsoever.

Remember that this is congress' decision; don't blame the 10 people setting interbank rates 'cause they're just the hired help doing what congress told 'em to do.