The transition to Spring came with a firm reminder of the dangerous world in which we live. The terrorist attacks in Belgium came just 5 months after the Paris attacks last November. What’s worse is the fact that they are connected. Global Markets held in surprisingly well this week, all things considered. The 5-week win streak for the DOW and S&P came to an end, but we anticipated that when we started the week. The rally from the lows have quickly taken the Stock Market from oversold to overbought, in our estimation. We see the choppy price action continuing until the correction runs its course.
For years now, our investment strategy has been almost exclusively focused on the US. That will continue. The US economy is proving exceptionally resilient and our Market is the most stable of any. The 2 major overhangs in the US are Fed policy and the Presidential election. Until there is clarity on who will win the White House in November and when rates go higher, we expect things to stay volatile. We know how to deal with that.
The problems overseas are much more severe. And it would be naive to think they don’t impact our world. Europe is facing a refugee crisis of great proportion. Open borders create opportunity with vulnerability. The terrorist attacks are proving it. Calls for closed borders and nationalism are on the rise. Europe was already facing serious challenges, both economically and politically. Without the consistent aid from its committed central bank, Europe would surely be in recession. The case for Britain to leave the European Union is getting stronger. There is a great deal of political and economic uncertainty as it applies to Europe. It’s not a healthy situation.
It’s much healthier at home. Sure things are far from perfect, but the American Dream still lives. This weekend, Americans will embrace the Spring weather and celebrate our way of life. Sales at Amazon and Wal-Mart will stay steady. Monthly AT&T and Verizon bills will be paid, because few people can live without their phones and tablets. Couches will be full of fans tuning into to more March Madness on CBS. Large crowds will be filling up their tanks with cheaper gas to hit the beach or the snow or even pay a visit to Mickey Mouse. The US economy is wide open for business; 24/7, and it’s growing.
This Bull Market is used to these global issues. Quite frankly, that’s really all it has known. It’s been a bumpy ride since 2009. Bumps are easily navigated with little damage when highly visible and approached at the right speed. We downshifted a week ago. We will accelerate when things clear up with smoother surface. Something else that has caught our eye again, is a shiny glimmer in Gold. We’re all over it.
The Market will be closed tomorrow, in observance of Good Friday. Our office will be too. We will be back, dark and early on Monday.
Enjoy the weekend. Happy Easter.
Mike
