Broad market index is buoyed at year high with relatively light volume trading compared to previous week. Investors are holding stocks in the portfolio for future appreciation. Lack of selling pressure help to keep stocks on a rising trend. Hedge funds continue to attempt to push equity stock higher on buying interest from individual investors. However, individual investors become more cautious as the market advances further. Wealth creation effect encourages them to enter the equity stock market after staying on the sideline for extended time. However they are closely watching the new wealth from equity stocks and is ready to guard their wealth against market turbulence. On the other hand, hedge funds are manipulating the market with liquidity from capital market. There remains probability that hedge funds will start to sell down the market when it has climbed to certain level and unfavorable news come out of market. Institutional investors remain neutral with combination of cash and equity stocks in the portfolio. The gradual advance of market help to maintain a bullish outlook from diverse investors. It is uncertain whether the economic growth is strong enough to attract support from all market participants for a continuous climb of the market.
The 2008 financial crisis triggered the recession. It also created an opportunity of wealth transfer leading to the concentration of wealth in current society.
"BERNANKE: Inequality and Tax "Loopholes" Are a Big Problem For America" Inequality is the result of an economy that favors the financially savvy and the globalization trend that has decimated our manufacturing sector.
"David Stockman: Lack of Middle Class Jobs + Low Growth = "Alleged Recovery"" Stockman believes severe structural problems in the job market will continue to haunt the U.S. economy. Most of the job gains come from temporary or entry level jobs, he says. But, without rejuvenation in the "base of the economy...where the high paying jobs exist" the economy will continue to struggle with "very, very slow growth." "We've got a real income distribution problem in this economy," argues Stockman, "and it's getting worse, not better."
"Obama-GOP Agree to Tax Breaks But "We Need Major Tax INCREASES," David Stockman Says" "Nothing will happen on the deficit" unless and until there's "major upheaval" in the bond market. Treasuries rallied Monday following Ben Bernanke's appearance on 60 Minutes but the bond market is likely to suffer a "firestorm of selling" sooner rather than later, Stockman predicts.
Although equity stock market advances in the past two weeks, it does not jump on massive buying from investors. Institutional investors become less aggressive in buying as earlier in the year. Individual investors take the place to drive the stock market lately. Hedge funds switch portion of the portfolio from treasuries and bonds to equity stocks and create turbulence in the market. Short term outlook on market is volatile.
"Buy? Sell? Hold? Investing Moves to Make Now" As the year winds down, investors confront a number of confusing trends, making it harder to figure out if it's a time to buy or sell. One example of how bewildering it's become: The Federal Reserve has launched a historic program to buy bonds, a step termed "quantitative easing," aimed at pushing down bond yields and mortgage rates and other consumer interest rates. But long-term bond yields and mortgage rates have climbed, not fallen, since the program was unveiled just over a month ago, underscoring how mystifying the current investment environment is.
"What Happened to the Rally? Why Markets Are So Worried" The level of uncertainty is threatening a rally across markets, even at a time when many economists are raising their growth forecasts for 2011. "Momentum is clearly subsiding despite the rampant positive sentiment, and negative divergences are highly evident," David Rosenberg, economist and strategist at Gluskin Sheff in Toronto wrote in his daily analysis. "Just as the economics community was doing radical surgery right at the July-August lows in the market, it is now raising its growth projections right at the highs. That is a contrary warning shot."
"Companies Cling to Cash" Corporate America's cash pile has hit its highest level in half a century. The cash buildup shows the deep caution many companies feel about investing in expansion while the economic recovery remains painfully slow and high unemployment and battered household finances continue to limit consumers' ability to spend. "The corporate sector is looking at the household sector and saying, this is not the environment where we should expand our business," said Deutsche Bank economist Torsten Slok.
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