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Lindsey Report November


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The S&P 500, Dow Jones Industrial, Nasdaq got off to a rocky start in October: then things got ugly! Around the same time, there were negative reports on Germany’s economy, suggesting that they might be falling back into recession (MSN Money). Many believe that if Germany falls back into recession, then the entire Eurozone would as well.  That seemed to trouble the markets.

Of course around the same time, domestic Ebola fears heightened when the two nurses in Texas contracted the virus and one decided to gallivant around the county.  It seemed that those major headlines were the impetus necessary to lead the equity markets down.

In the new information/technology age, it did not take long for equity values to have a meaningful correction.  In about a month’s time from the S&P 500 had fallen from an all-time-high of 2012 (9/18/14) to an intra-day low of 1820 (10/15/14).  That move translated into a 9.5% rapid retreat (Yahoo Finance).  While many had been expecting some sort of correction (this author included), the speed of this retreat was still surprising given there was no major event.

Equally surprising was what happened next.  The second half of October was basically the polar opposite to the first half.  The S&P halted its retreat on the 15h and staged a rally, which not only recaptured all the losses, but proceeded to set yet another all-time-high on the 31st (Rueters).  October lived up to its reputation as being a tumultuous month for equities!

t would seem that the retreat was overblown.  Fortunately, and thus far, the domestic Ebola patience fared well and there have been very few additional cases.  Oh Yeah, Germany did not fall apart overnight. Therefore, the focus of the markets returned to domestic economics and corporate earnings.

October was a big month Q3 earnings reports.  Factset.com reported that as of 10/31, 78% of the S&P 500 companies who had announced earnings had beaten estimates.  That is a very strong number.  Moreover, the Commerce Dpt. reported that the economy grew at 3.5% in Q3.  Still, the report that really got my attention was the Unemployment Report on 10/16.  It showed the 4-week average for initial claims of 281,000 was at the lowest level since May of 2000 (Business Insider).  This seemed like a very good signal for the jobs market and the U.S. economy as a whole.

 

 

The opinions voiced are for informational purposes only and are not intended to provide specific advice to any individual. To determine which investments are appropriate for you, consult myself prior to investing. Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly.  The economic forecasts set forth in this commentary may not develop as predicted and there can be no guarantees that strategies promoted will be successful.

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