Should We Worry?
Yesterday the market started lower and then found some buyers, but the question still begs too much too soon or do we go higher? The answer to that question is worth millions and the reality is no one really knows. Time will tell and we will gain clarity in the coming weeks, but for now we have to take what the market gives.
Issues I think are worth watching near term:
- 1) Jobs. The unemployment data was better in April than many expected, however you have to look at the number and note the government is the one hiring not the private sectors. That is a concern and I don’t believe this issue is over yet. Keep an eye on the data it will hold a key to the future.
- 2) The White House. Plenty to be worried about in reference to what can happen. Taxes are the number one issue I see facing the economy from the White House. If we get a tax increase near term it will have an impact on the economy and Wall Street. Health care is another challenge facing us and the impact it will have on Wall Street. The budget deficit is a big issue looking forward and the list goes on, but as you can see this is a big worry point to watch.
- 3) Inflation. Need I say any more? The threat of inflation from the glut of money put into the system from the Fed and the Treasury are real. They will find a home eventually and that impact could be more inflationary than economy building in time. Watch how it pans out with the inflation indicators on tap later this week.
- 4) Gasoline. The price of gas at the pump has already jumped 20 cents over the last four days. The rise in crude and other commodities is more on speculation than demand. I don’t want to believe we are going higher without justifiable cause. However, the reality is we are facing a potential spike higher in prices. Bad for the economy and psyche of the consumer. Negative no matter how you look at it for the future.
- 5) Banks. They are in the process of using their recent popularity to raise capital from the private sector. While that is a positive the negative is they are raising money. Dilutive in most cases and uncertain in others. This is a questionable sector relative to future growth and timing. I believe we have to be patient and let this unfold for better or worse.
Be patient and let the market unfold. I think we should be worried about the unfolding issues facing this market, but let this play out, keep your stops in place and hope for the best.
