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Daily Market Update – January 27, 2016 (Close) Yesterday was a really nice day, but it came after a really bad day, both of which simply followed oil down and then up. And so, after yesterday’s gains, we’re still closing in on ending the first month of the year with a loss of about 8%. With so many expectations for 2016 to have been a good year, because scant data suggested that the year following a flat year, as was 2015, would be a good year, we have a long way to go just to end up flat again. The same type of scantiness of data is what the FOMC is facing, as they prepare their statement release this afternoon. Many expect that the FOMC Statement will suggest that there is room for more interest rate increases to come in 2016. There’s no question that there’s room, considering still how low rates are, but where is the data to support the notion that such interest rates are warranted? We may find that out this afternoon and there may be more data to come on Friday as some GDP data is released. But what continues to remain unknown is how market traders will react to news of any kind, which may also include the absence of any substantive news this afternoon. With no really good reason to move stocks higher now, as earnings aren’t yet delivering any kind of boost, you do have to wonder what the FOMC has in its reserve if the economy is in need of any boost. This morning’s futures trading is giving back a small portion of yesterday’s gain, but that’s not too surprising, considering the recent back and forth and the uncertainty associated with what may come just 6 or so hours from now. Of course, all could be undone or irrelevant if the market continues its association with the movement of oil prices. Those moves of late have really had nothing to do with supply and demand and have likely been driven by more opportunism than is usually the case. While it would be nice to see oil and stocks go in their own ways, the sharp decline in oil just the past few weeks does give some further opportunity for those opportunists to step in, so I hope the association continues for a while longer. That is, until we get to the point that many are still expecting oil to start re-testing the $20 level. That would be a perfectly good time for investors to realize that there has to be a net benefit when the plunging price of oil is still more likely associated with a supply glut that’s driven by a glut of suppliers rather than a dearth of users. Like most everything else that’s part of some kind of cycle, that day will assuredly come, but it has already been such a long, long time in coming. For my perspective, each day brings that eventuality a day closer and I’m going to stay liquid for as long as the market can stay irrational. . . |
