September 7, 2014
Weekly Market Outlook
By Keith Schneider
The red hot US equities market even caught the attention of the writers of True Blood, the blockbuster vampire HBO mini- series. In the series finale, vampires and humans can now live together in harmony as vampires discover and bottle synthetic blood rendering the need to consume human blood obsolete. The vampires, making money hand over neck, take the company public, creating the first billionaire vampire and life is good on Planet Earth. Wouldn’t it be nice if blood sucking jihadist‘s could be given a lifetime supply of New Blood to satisfy their thirst? If the old adages of headline news often usher in tops and bottoms, does this count?
Speaking of New Blood, ECB president Draghi, fearful of a slowing Eurozone economy, also added a large dose of new liquidity by dropping rates yet again and announcing quantitative easing. This effectively leaves rates at zero and at one point many Eurozone countries had negative short interest rates. The big question is will this be enough to spur a lagging economy amid geo political tension with Russia? An even bigger mystery is the action In US treasuries, as they got hit hard amid this news, which of course is counter-intuitive. Lower rates in Europe here should make our bonds more attractive but the market action is indicating an island top.
However, the dollar remained true to its fundamentals and its technical patterns, capping the week with an explosive move to highs not seen in over a year.
In the US markets, small to midcap stocks are still lagging its bigger cap brethren and there is no telling how persistent this disparity will be.
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