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Daily Market Update – June 11, 2014 (9:00 AM) This morning’s pre-open trading brings something rarely seen lately. The morning appears to be ready to open with some moderate losses and as a result the volatility is actually creeping up just a bit from its all time low levels. Always needing a reason to explain even that which has no need for explanation, this is so far being blamed on the anticipated legislative gridlock that would ensue as a result of the unexpected loss of Eric Cantor in yesterday’s Virginia 7th District Congressional primary. That’s a stretch. Besides, it’s not as if things would get noticeably more grid locked, as legislation didn’t exactly flow smoothly with Eric Cantor in a position of leadership. But as far as predicting the future impact of this event, it may be useful to realize that those who predicted an easy and runaway Cantor victory are now predicting the aftermath of the loss. That sounds reasonable. I’d follow their forecasting to the end of the world. If indeed that primary upset is to blame for some mild nervousness this morning, it shouldn’t last very long, particularly since no really large unresolved items remain on the legislative agenda that would be expected to adversely impact the markets or even individual stocks. For all of the talk and controversy around immigration legislation there’s little reason to believe its passage, defeat or delay would in any way move the markets. As far as those issues that would possibly impact markets, such as budgets, debt ceilings and government shutdowns the loss of Cantor and his replacement by a Tea Party member may simply be the stimulus to bring the traditional arms of both parties to the realization that they have to work together and actually show accomplishments rather than throw tantrums. While this morning has seen a tiny increase in volatility, you now increasingly hear discussion of volatility and how its low level is making it difficult to find and execute trades, which is an especially big deal for those whose livelihood is based upon trading volume. Ordinarily you would think that the market reaching new highs day in and day out would attract all sorts of money and drive volume higher and higher, but that just hasn’t been the case and unless there’s some sort of break-out higher, it doesn’t appear as if that’s going to change. Being a Wednesday, my expectation is usually for a slow personal trading day. However, market weakness, if it continues into the session may offer some reason to add new positions. I’m not counting on it, but of Eric Cantor can lose, then anything may be possible.
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