Equity market outook unpredictable
What's new?
The opening of the equity market in 2014 was accompanied by inane commentary on CNBC and other networks about what the opening of the year meant for the entire year. This line of thought particularly focused on the fact that the market had risen slowly but surely during December and reversed course after the New Year. What serious market analyst could not have predicted with high probability that this would happen.
Year end numbers are important to fund managers. This year they seemed to uniformly be looking to have the best results possible for 2013 so all of that money on the sidelines earning less, well far less, than 1% in money market funds and bank deposits would finally be shocked into finally moving more money into equities. That this has been predicted for the last three years does not deter the optimism of fund managers. It could eventually happen, most likely at exactly the wrong time for those new entrants. There was modest liquidity in December and keeping the market moving up was a priority. This was no conspiracy or anything like that. It was just obvious like minded thinking.
So the beginning of 2014 was set up for a time of adjustment. That could continue for some time as Obama has lost significant credibility, and even if the Congress was far sighted enough to pass a bill that included investments in infrastructure spending and research and development there is significant doubt that he would or could manage it properly, or even pay attention to it. Then there is Janet Yellen, the new Fed Chairman. She seems fine, but the market will need some time to see and judge her performance. Part of Bernanke's power was based on the depth of his intellect and his clear distance from the White House, although Obama tried to take credit for the Bush appointed Bernanke's success at every opportunity. Finally no one yet knows if we will have a more functional Congress, that comment pushes skepticism aside. If financial markets get edgy, more cooperation might follow.
We need growth and not an oversupply of rules and lawsuits. Growth will bring jobs. It is unclear whether Obama has any real understanding of economics and finance at this point(it certainly has not been clear to date), or any desire to do more that talk big and beautifully.
The only real good news of late is that HSBC's market analysts downgraded the U.S. equity market to underweight yesterday. In my experience the Brits have always got it wrong when it comes to market calls on the U.S. They are generally eloquently incorrect.
The opening of the equity market in 2014 was accompanied by inane commentary on CNBC and other networks about what the opening of the year meant for the entire year. This line of thought particularly focused on the fact that the market had risen slowly but surely during December and reversed course after the New Year. What serious market analyst could not have predicted with high probability that this would happen.
Year end numbers are important to fund managers. This year they seemed to uniformly be looking to have the best results possible for 2013 so all of that money on the sidelines earning less, well far less, than 1% in money market funds and bank deposits would finally be shocked into finally moving more money into equities. That this has been predicted for the last three years does not deter the optimism of fund managers. It could eventually happen, most likely at exactly the wrong time for those new entrants. There was modest liquidity in December and keeping the market moving up was a priority. This was no conspiracy or anything like that. It was just obvious like minded thinking.
So the beginning of 2014 was set up for a time of adjustment. That could continue for some time as Obama has lost significant credibility, and even if the Congress was far sighted enough to pass a bill that included investments in infrastructure spending and research and development there is significant doubt that he would or could manage it properly, or even pay attention to it. Then there is Janet Yellen, the new Fed Chairman. She seems fine, but the market will need some time to see and judge her performance. Part of Bernanke's power was based on the depth of his intellect and his clear distance from the White House, although Obama tried to take credit for the Bush appointed Bernanke's success at every opportunity. Finally no one yet knows if we will have a more functional Congress, that comment pushes skepticism aside. If financial markets get edgy, more cooperation might follow.
We need growth and not an oversupply of rules and lawsuits. Growth will bring jobs. It is unclear whether Obama has any real understanding of economics and finance at this point(it certainly has not been clear to date), or any desire to do more that talk big and beautifully.
The only real good news of late is that HSBC's market analysts downgraded the U.S. equity market to underweight yesterday. In my experience the Brits have always got it wrong when it comes to market calls on the U.S. They are generally eloquently incorrect.
posted by John Borden at 11:55 AM
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