Like Old Times It seems like old times today -- and not the good old times. Greeces stock market has plunged 11% amid political strife and uncertainty about its bailout program; Chinas Shanghai Composite dropped 5.3% (losing 6% in the final hour of trading) with reports attributing the sell-off to liquidity fears and angst about the government potentially lowering its target growth rate to 7.0%; and the S&P futures are down 19 points. We cant help but laugh at the idea, though, that the turmoil in global capital markets will likely be trotted out as a basis for why the Fed is apt to stick to the zero bound longer than some thought just a few days ago when the November employment report had a lot of people thinking the first rate hike will occur in the first half of 2015. Whether that consideration leads to the good new times of buying on the dip remains to be seen, yet if anyone needed an excuse to take some money off the table following the huge run by the U.S. stock market off its mid-October low, there are a number of them out there. For good measure, one could also look to Verizons (VZ) warning that promotional activity will put pressure on its wireless segment EBITDA and EBITDA service margin, Conns (CONN) dismal third quarter report that featured a 217% increase in its provision for bad debts, the looming December 11 deadline to pass legislation to keep the government running, and/or the simple fact that the stock market is overextended. A pullback yesterday in many of the momentum stocks and the transport issues, despite a 4.0% drop in oil prices, shed some light on the markets overbought condition. Separately, ConocoPhillips (COP) announcing a 20% reduction in its 2015 capex budget shed some light on the downside of plunging oil prices for the energy sector. Crude futures are up 0.7% to $63.50/bbl today, but traded below $63.00/bbl yesterday for the first time since July 2009 when the world was knee-deep in the U.S. financial crisis and eurozone sovereign debt issues were coming to a head. Todays open might resemble some of the opens seen in those good old bad days. The market can deal with that. What participants will be watching carefully is how it deals with things after the market opens.
Posted on: Tue, 09 Dec 2014 14:05:01 +0000
Trending Topics
Recently Viewed Topics
© 2015