Despite the volatility, we might be seeing a bottom in the national average of unleaded gas according to AAA data. Take a look at the chart below to check it out yourself!
Markets took a shit today with the S&P 500 closing down 1.83%, while the Nasdaq closed down 1.57%. The 10 year also ended the day at 2.04%. I'm not a big watcher of financial TV, so I don't know what they are panicking about these days, but I would guess that domestic markets were impacted by big down days across Europe as there are renewed fears that Greece is going to leave the Eurozone. CAC 40 was down 3.31%, DAX was down 2.99%, and Euro STOXX 50 was down 3.70%!
It probably doesn't help that crude oil also tanked some 5%+, closing below $50 at $49.88 on reports that Russia continues to pump record amounts of crude and that Iraq is exporting the most oil since 1980. These pieces of oil news are adding to oversupply fears. I wonder every day about when more people are going to start talking about demand fears, which could send prices even lower. Not completely related, but one of my colleagues always likes to talk about how oil was one of the leading-most indicators of the Great Recession.
As opposed to 2014 I'm also seeing some of the more bullish sell-side shops start to become more cautious, which is a little bit worrisome. I'm not so worried about the US economy as it currently stands, but problems in Europe and Japan could spill over very quickly given the increasingly interconnected world we currently live in. Europe really needs to do some sort of QE, but I don't think it's possible for them to do something like the US has done. At the same time, the idea that they are trying to do something similar could be all Draghi needs. Time will tell.
Those are just some of the things I'm thinking about on this cold, snowy Cleveland evening...
S&P ended the first trading day of 2015 pretty much flat, while the 10 year decreased to 2.12% and crude ended around $52.60. I take all this as a mild positive considering stocks took a dive after ISM reported its survey on manufacturing this morning. The release missed expectations by the largest margin since January 2014 and also decreased MoM. Within the report there were also big decreases in new orders and prices paid. While perusing twitter I noticed how bearish everyone seemed to be thanks to this big miss and couldn't help but be reminded of the exact same thing happening last year...first big release of 2015 misses and now the world is doomed. I will also note though, that many market participants may have looked past this report evidenced in the market rallying a small amount through the afternoon. In my opinion, the jobs report next Friday is going to be a bigger deal and will set the tone for the first few weeks of trading in 2015.
In terms of other random thoughts for the day...everyone seems to think rate hikes are coming this year, which could impact multiples and send stocks diving, but I can't help but think that the Fed has tried extremely hard to prepare the market for these rate increases that we could continue to see stocks rally barring adverse slowdowns in other developed economies. After all, the markets don't react to expected news. Rate increases will obviously strengthen the dollar and while that may be bad for emerging economies, I think it will very much help places like the Euro Zone and Japan as they rely heavily on exports.
One of my goals is to get my thoughts down in writing more in 2015, so hopefully you all will be able to read more about what I am thinking in the coming days and weeks!