Threading the Needle

As far as the stock market is concerned, another week passed with little net change. The objective of the the Fed seems to be to strike a very fine balance. On the one hand, they know that if stock prices rise much higher, they face pressure to raise interest rates. That risks a decline in stock prices. If stock prices fall too fast, they risk triggering a crash.

My guess is, two months ago Mr. Obama sought assurances from Janet Yellen in their private meeting
that the FOMC and Fed would try to hold this house of cards together until after he’s gone. He wants to escape blame for the coming bubble pop. Of course, whether they can actually pull off this charade is another matter entirely. I have my doubts.

Monday, stocks rose 0.4% in Asia and Europe and 0.7% in the U.S. on light volume. This was enough gain move the S&P 500 Index back above it’s 2100 benchmark and bring the Dow and NASDAQ very close to theirs. Tuesday, stocks rose 0.8% in Asia, 1.2% in Europe, and 0.4% in the U.S. on light volume.

Wednesday, stocks rose again in Asia — this time 0.6%. In Europe, they declined 0.5%, and in the U.S., the rose .04% on low volume. This was enough to lift the Dow Jones Industrial Average just above the 18,000 mark. Precious metals rose 1.5% while their miners gained twice that amount.

Thursday, stocks rose 0.7% in Asia, fell 0.9% in Europe, and fell 0.5% in the U.S. on low volume. This dragged the Dow below the 18,000 benchmark again. The VXO gained 6% to close at 13.68 while the 10-Year U.S. Treasury Bond yield fell 2% to close at 1.68.

Friday, stocks fell around the world: 1% in Asia, 2.3% in Europe, and 1.4% in the U.S. on light volume. This was enough loss to bring the S&P 500 Index below the 2100 mark again. The VXO shot up 14% to close at 15.54 while the 10-Year U.S. Treasury Bond yield fell 3% to close at 1.64.

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