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Now is a Good Time to Worry a Bit

By: ,

September 9, 2014   9 pm

As happens all of the time when you think the ‘coast is clear’ it isn’t and when you worry like hell–things turn out well.  That being the case we choose to worry like hell for the balance of the week (which should bring interest rates back down for us).

So this week we have seen 2 days in which the 10 year treasury moves up by a total of 15 basis points and the S&P moves down by 20 points (a 1% downward move) neither of which causes us a sleepless minute, but what gives us more pause is the confluence of events this week.

Thursday is the 9/11 anniversary and I don’t think there is anyone over 30 who can forget that morning–I know I had CNBC on and Mark Haines noted that a plane had struck the Trade Center (by chance I had worked in that tower for a few months years ago) and the rest is sad history.  Additionally the ‘worry warts’ all of a sudden decide to worry about what Janet Yellen may or may not say or do – just stop – there is no new news here!! None! Nada!  

Interest rates popped this week in Europe by 1/8% or more – and given the propensity of our rates to trade in some loose relationship to European rates it is no surprise that rates here popped a bit.  Regardless of economic numbers in the U.S. (which we have trouble believing half the time) we think rates are more likely heading lower from here–in spite of the markets tending to recently act like the U.S. is insulated from the rest of the world it is not–the lousy economy in Europe IS a problem for the U.S. Period.

Japan released finalized GDP for last quarter and it was worse than earlier thought–a drop of 1.7%.  After the huge sales tax hike early in the year there are more increases scheduled to occur in sales taxes–all the while their central bank is pumping like hell.  It should be accepted that Japan is a no growth old economy that is likely to contribute less and less to the global economy–demographics make it a given.

Of course we then have Obama announcing his strategy for ISIS tomorrow night–a week or two ago this was a non market factor, but now it appears more likely to be a negative.  In reality it may be  a negative in that the President has a chance to show some leadership and if he fails we will have a week of negative news media harping on it.

So we have bunches of market catalysts cropping up all of a sudden.  In the end we will not change anything that we have been trying to do.  Yes, we have given back .4% of return this week–but so what!   11% in 8 months is a gift!!  A small give back is a small price to pay, but one we expected to pay at some point in time.

 

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