Marc Cuniberti The news wires is alight with economic news jerking markets and investors to and fro in an almost bipolar-like fashion. Up hundreds of points one day and down just as much the next, the market and its investors seemingly don’t know which way to turn.
With the Federal Reserve on inflation watch, reading the economic tea leaves as statistics hit the news wires almost daily, investor’s heads are spinning round and round trying to catch their breath as markets jump around like the proverbial Mexican jumping bean.
The financial news is mixed and contradictory, to say the least. ADP reported the economy added 208,000 jobs in September fueling speculation the economy is still healthy and growing. Either that or the free money showered upon the consumer during CoVid is running out and people are starting to get off the couch and go back to work.
Meanwhile, to the chagrin of consumers, OPEC just announced it is cutting oil production by two million barrels a day to shore up prices. I had to scratch my head at that one. As if gas prices aren’t high enough. Oil stocks have been on the move lately after a brutal hammering from mid-June to mid-July. Not a recommendation to buy or sell mind you, but oil is one of the few bright spots in an otherwise bleak summer in the stock market.
Speaking of the stock market, after a brutal 6 weeks of selling starting mid-August and through most of the month of September after Jerome Powell, the head of the Federal Reserve (the FED), gave a short but sobering speech on his continuing plans to address inflation, the start of October brought some welcome relief rallies in the indexes.
Now with signs the economy is indeed slowing, another bout of hope that a Fed pivot is in the cards is fueling the current market enthusiasm. The pivot refers to the FED perhaps backing off its recent seemingly relentless increases in the FED overnight interest rate. With a historic three .75% increase in a row now in the books, some analysts think the FED will back off further increases, for now, to let the past increases work their way through the system. Others argue the inflation will only worsen from here and the recent statistics are just economic noise.
Adding to the drama, Tesla founder and corporate maverick Elon Musk have flopped once again on his decision to buy social media giant Twitter. The purchase, first announced in early April after buying a chunk of Twitter stock a month earlier, in July he then backed out of the deal and a lawsuit filed by Twitter soon followed. Last week, to the surprise of many, Musk announced his intention to go through with the purchase after all. No doubt more craziness will follow.
The war in Ukraine, unfortunately, rages on, crimping supply lines and commodity sources, adding to our economic woes and current consumer shortages.
With the world seemingly in a topsy-turvy reality which never seems to end, investors can maintain a portion of the investment envelope in cash or cash equivalents to reduce volatility and diversify the rest in stocks, bonds and other securities according to one’s particular situation and level of risk tolerance. A financial advisor can also be consulted to better assist the investor.
“Watching the markets so you don’t have to”
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This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, SDSU, and California Insurance License #0L34249. His website is moneymanagementradio.com, and was recently voted Best Financial Advisor in Nevada County. 530-559-1214
