Another wild and crazy week with headlines and news driving the action. Earnings continue come rather positively with a few names punished for not coming through. By and large companies are saying good things about their business, and we also see this in economic numbers. The recent jobs report had some good surprises and may set the tone for more constructive job growth over the next several months. The consensus believes the jobs report was just ‘ho hum’, but I believe the data is positive, productivity is up, pricing is firm and rates are low. Now, if we can only get away from the macro issues!
This last week was typical of what we have seen for the past several months. The macroeconomic issues dominate the news and the move markets. Monday it was Japan and yen intervention, their attempt to take some heat off the yen and inflate. Tuesday it was all Greece all the time, the PM deciding that maybe the Greek people would decide whether or not a Euro bailout was right. As one would expect that infuriated those involved, the market took the cue and sold off hard. Fear rose sharply, the VIX flying more than 50% in two days. I suppose some day these issues will subside and then we can really focus on what makes a difference rather than the manipulation of markets.
There are some very nice looking chart and technical patterns of individual issues. The most recent pullback was bought up aggressively, so let’s give the benefit of the doubt to the bulls – for now (see chart below).
As we head into the final stretch of 2011 we are reminded of the chase for return. Believe me, as a former hedge fund manager and pension investment manager these last couple of months are a scramble. You don’t want to post returns that are less than the market at year end. I remember in 1999 when the markets were up strong money continued to flow in a big way from Halloween until end of year. I suspect we’ll see similar action with a very accommodating Fed and strong earnings.
Bulls are hungry here, but the news wipes out any momentum or trend. Like a dog that has not eaten for a week they want to eat but continue to be denied. Perhaps feeding time happens soon.