Succinct Summation of Week’s Events for 6/5/15 (+ 2 bonuses)

It's time once again for the Sunday wrap and bonuses.  It's been a busy week, 10 positives and 7 negatives this time.  Two very cool bonuses this time, one is from today's Ritholtz Washington Post column with advice on how to prepare for the coming tumult (as if what we've been experiencing for the past several years has not qualified as "tumult.")  Pay particular attention to the wisdom he imparts in the final paragraph, "I am not making a forecast that a crash is going to occur.  My best guess is that we are somewhere in the fifth or sixth inning of a long secular bull market that could last for 10 to 15 years.  Perhaps it's only the third inning - it's June, and the New York Mets have a winning record.  That should tell you that anything can happen."
       Bonus #2 is a very instructive 13 minute video by celebrated market guru Peter Bernstein about the nature of managing risk, something to which we are all very devoted.  Hope everyone had a great weekend.

The Search for Meaning in Jobs Numbers

In his column yesterday, Barry Ritholtz sought to contribute some perspective to the very positive May jobs report.  It contains the usual cautionary warnings that these reports seem to be compiled almost at random subject to constant revisions upwards and downwards.  This particular article also sheds some nice perspective on the nature of this particular recovery and why it is not at all unusual that it is behaving quite differently than other past recoveries.  There is much truth here.  I'm not saying that I disagree.  I would just like to add my own cautionary note that these positive reports being called into question is not at all uncommon though you rarely see the experts taking issue with and being critical of negative reports.  So just why is it that Wall Street seems to thrive so much on pessimism?  A thought for the weekend.

Strong jobs report gives Wall St. second straight losing week

The lunacy continues with the Dow dropping 80 points right out the gate, then soaring 120 points in the next couple of hours before beginning a gradual descent all afternoon to close 56 points down.  Can you guess what happened?  Indeed, as was forecast yesterday, the market feared the May jobs report was going to be very strong with an expected gain of 225,000 new jobs.  In fact, it came in remarkably strong at 280,000 in addition to which March and April numbers were revised upwards another 32,000 jobs for a total of 312,000 new jobs.  The unemployment rate rose slightly from 5.4 to 5.5% only because there is so much good news out there that many more jobless have now entered the market with new confidence in their prospects.  So at first there was elation that the recovery was humming along so well, then the inevitable realization that always takes place after good news that a September rate hike now seems rather certain.  Bear in mind that for months now the market has been expecting and prepared for a September hike, that the real fear was for a June hike, which is obviously now a non-issue.  Thus the fearmongers drove the market down 176 points from its high, especially when the President of the New York Fed confirmed the long held policy position that the economy could indeed handle a hike later this year.  So the seesaw continues but, happily, with the same players as volume was right on average at 6.2 billion.  There are a small number of players who are moving stocks right now as the rest remain on the sidelines waiting for things to settle down, which will likely not be for a while.

Wall St. drops before jobs report; Greece worries linger

Another day of lunacy as the Dow plunged 170 points and for what?  Everyone's afraid that tomorrow's jobs report is going to be too good, the forecast being for 225,000 new jobs showing the economy is still steadily on the path to recovery.  So what is the problem with Wall Street?  Investors still haven't decided whether they want a recovery or not, since a recovery would mean eventual higher interest rates which many fear (irrationally so IMHO) will bring this historic bull market come crashing down.  Yes, the Fed has been consistent in its policy statements that interest rates will remain low until the economy is well on its own feet again.  Many even blame the near-zero interest rates for the weaknesses in the economy, hypocritically the same people who scream bloody murder and begin panic selling every time the Fed even hints at a hike.  The buy-and-holders are winning this contest hands down and the professionals hate that.  Adding to the lunacy was new fears about Greece.  Even though yesterday the market lauded Greece, even with the statement that their debt payment would be delayed, today suddenly that same statement turned an optimistic market negative again.  The good news is that the same people are buying and selling as volume remained right in line with averages at 6.3 billion.

Wall St ends up; financials gain with bond yields

The Dow zoomed up 150 points in morning trading before reversing course all afternoon and closing with just under half of that - a 64 point gain.  As the market has been swinging wildly back and forth over Greece, down on pessimistic days, up on optimism, this morning's exuberance was again a direct result of the market once again hopeful about an impending agreement between Greece and its creditors.  And it should come as no surprise that, even though yesterday's dip was partially due to fears over the recent rise of bond yields hurting stocks, today the market decided that rising bond yields were actually a good thing.  As today's expert stated, "yields going higher is a net positive for all of the financials."  Another bit of good news was yet another statement from the Fed that the U.S. economy during April and May was expected to show continued moderate growth, reversing Q1's losses.  None of this had much impact, though, as volume continued right along with recent averages at 6 billion shares.

Wall Street ends down; utilities fall as bond yields jump

Another see-saw day with the Dow dropping over a hundred points right out the gate only to recover and be up over 50 points by 2 pm, then diving again to close with a relatively modest 28 point loss.  So what was behind all this adrenaline?  First there was the bad news -- utilities falling, bond yields rising -- then the good news that Greece was close to a deal with its creditors.  But, as has been happening frequently lately, before day's end investors get the willies again about interest rate hikes and start selling like crazy.  And again this was despite a statement from a Fed board member that "the economy's recent poor performance may be more than transitory," or in other words, no rate hikes for a while.  And still again, today's sell off can be more or less ignored as it was on considerably lighter than usual volume, only 5.5 billion shares.  Everyone's on the fence waiting for Friday's employment numbers.

Wall Street edges up after recent losses, mixed data

On a spate of good news, the Dow was up nearly 100 points as late as 3 p.m.  Among the good vibes was rising manufacturing growth and a surge in construction spending.  But it was just enough good news to once again give the market the willies about interest rate hikes and thus in the last hour the Dow dove to close 30 points down.  This was despite a statement from the President of the Boston Fed, "the Fed is in no position to start raising interest rates."  Adding to the sell off was the looming Greek default as the beleaguered country missed its own Sunday deadline.  Volume was just a little below recent averages at 5.9 billion.