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Daily Market Update – October 19, 2015 (Close)
This will be a big week for earnings, as about 20% of the S&P 500 reports and with a large number of DJIA components from among them. The week is getting started with a really disappointing earnings report from Morgan Stanley which I thought might make it an attractive financial stock to consider buying , after not having owned it for a while. Short story? It did. The market also woke up this morning to the news of nearly 7% GDP growth in China. Depending upon who you listen to, the spin is either that the reported growth is disappointing or it’s better than expected. The one thing that you can probably count on is that it may be more deserving of revision than our own imperfect reports. While we occasionally hear people claim that our economic reports are cooked, especially immediately before a Presidential election, there’s not too much reason to believe that the Chinese economic reports aren’t manipulated on a very regular basis in order to fulfill political needs. Considering that there’s a fair amount of pressure from within and outside, you could understand why there might be some undeserved optimism being reflected in official data. This morning the market looked as if it may be taking a little rest and looking for some kind of cue in order to decide where to go next. Short story? It did. While the FOMC will probably be paying some attention to earnings and to matters in China, it’s not too likely that there will be enough coming from any sources, reliable data or otherwise, to give a really good reason to push forward with an interest rate increase. Now, sitting at the end of October, it’s actually hard to believe that we may not get that rate hike until 2016, as that kind of delay had been widely urged by most of the world. Not that long ago that smart money had been on an increase in March 2015, then June, then July and even October. While traders aren’t looking at that delay as being bad news, it really is bad news, as our own economy can’t seem to get the kind of traction to create any meaningful heat. It’s now been a while since Quantitative Easing has ended and there has been lots of time for something to take hold, but growth has been elusive, even as expectations for it have been widespread. Basically, the smart money doesn’t know much more about things than anyone else. With a decent amount of cash freed up by assignments last week and with only a small number of positions set to expire this week, I was inclined to want to spend some of that cash or at the very least look for some rollovers from among the upcoming week’s expirations in order to generate some income. As has been a successful strategy over the past few weeks, not because there’s been anything new about the strategy, but more because that’s just how things have worked out, I’d have loved to have see a down Monday to start the week so that new positions could be added on weakness. Short story? It didn’t happen that way, but neither did it run loose higher. While it’s generally a good idea to buy low, lately Mondays have offered that opportunity more than they had in the past year, treading water seemed good enough today, especially for those positions that have already had their own personal plunges lately. |
