The Noise just got louder

Last Friday 10/10/14, I wrote about “Rising above the noise” that has been increasing volatility and pushing equity markets down.

 Well that “noise” just got louder.  The noise today (10/15/14) was a second Dallas healthcare worker confirmed to have contracted the Ebola virus and economic reports out of Europe, specifically Germany, pointing toward declining economic growth.  This noise caused a massive flight out of risk assets (equities) and into safe-haven assets (mostly US Treasuries) during the early part of the day.

 However, not all the “noise” was bad.  At 2pm Eastern time on 10/15/14 the Federal Reserve released its Beige Book,  a summary of economic activity and conditions across the 12 Federal Reserve Districts in the US.  Essentially, the Fed found that economic growth was continuing at a modest to moderate pace across the US. Here is a link to a CNBC report that summarizes it well:  This report was received positively by the market as between 2pm EST and the market close at 4pm EST  the S&P 500 rebounded from a low of 1820.66 to close at 1862.49 (source: Yahoo Finance)

 So far the “noise” has drowned out the start of 3rd quarter 2014 corporate earnings season.  While we have only had a handful of earnings reports, so far most have been better than forecast with companies such as Alcoa, Johnson & Johnson, Intel, American Express and Netflix all beating estimated earnings per share.  See this CNBC report on earnings surprises:

 I remain convinced we are experiencing a normal correction in an otherwise healthy market. I believe that corporate earnings will continue to be better than expected and that fact will stop the fall in equity prices. I am looking for the equity market to rebound back to the 2,000 area on the S&P 500 by the end of the year.  However, I remain vigilant in monitoring economic and financial conditions for any signs that would necessitate a change in approach.

Although information herein has been obtained from sources deemed reliable, its accuracy and completeness are not asserted. All opinions and estimates included in this report constitute the judgment of the financial advisor as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

 Investing involves risk and you may incur a profit or a loss. Diversification does not ensure a profit or ensure against a loss. There is no assurance that any investment strategy will be successful.  Past performance is no assurance of future results.

 Please consider the charges, risks, expenses and investment objectives carefully before investing. Please see a prospectus containing this and other information. Read it carefully before you invest or send money.

 Information provided should not be construed as legal or tax advice.  You should discuss any tax or legal matter with the appropriate professional.

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