Will he or won’t he? Of course I’m asking about the president’s decision to attack Syria. China and a trade war; Aluminum prices; political uncertaintyin the Middle East; Zuckerburg testimony; the big banks earnings. Let’s tackle one at a time.
It appears as though the President is taking his time considering all of the information before acting. If he finds confirmation on the use of sarin gas I believe he will strike. I will be swift limited and decisesive. I do not believe in any stretch of the imagination we will have boots on the ground. It will be very short in duration not a prolonged war. This may cause some short term volatility but nothing to be concered about.
China seems to be capitulating by backing off of its threats to raise already existing tariffs on U.S products. Key words, “already existing tariffs”. It appears that this was more bluster on China’s part than real threat. Trade war fears are not over but very much less of threat.
Aluminum prices are heading for their best week in at least three decades, soaring as much as 15.7% to $2,325 per metric ton, as U.S. sanctions on major Russian producer Rusal (OTC:RUALF) sent buyers scrambling to find supplies. Short-term price hikes won’t do much to affect the cost of the consumer goods, but if aluminum remains expensive, companies will eventually look to raise prices on products that use the metal.(Seeking Alpha)
“Political uncertainty in the Middle East has returned to the fore,” the IEA said in its closely watched monthly report. “It remains to be seen if recently elevated prices are sustained and if so what are the implications for the market demand and supply dynamics.” With crude futures at highs not seen since December 2014, the IEA also called OPEC’s goal to shrink oil stocks a “mission accomplished.”(Seeking Alpha)
Zuckerburg’s testimony was mostly softball questions from old congressmen and women who for the most part don’t use FB and really don’t understand the Facebook model. Zuckerburg was articulate and very well prepared. His attorney’s did a very god job preparing him.
J P Morgan, Bank of America, Citigroup all reported very good earnings. Wells Fargo did not. Lesson, when you cheat your clients they tend to stop doing business with you.
Attacking Syria will only cause some very short term volatility and I am not concerned at all. China and a trade war is still a concern but much less. Aluminum prices could become inflationary and thus cause a potential problem but is not a threat currently. The Middle East is always volatile and the concern there is oil price escalating. This also is inflationary but we have partially hedged that by purchasing big oils in our portfolio. I always list oil prices at the end of this weekly blog. It is always good for the markets when the financials report good earnings. When the financials lead a rally it is almost always strong and sustainable. It is never good when a company’s CEO has to defend its business before Congress. FB is an avoid right now.
We have to remember what makes the markets go up and that is earnings. I see nothing in the list of key current events that threaten earnings. This quarter I am anticipating very good earnings reports across the board. We had a very good start with the big banks. Our market should pull out of correction territory and return to rally.
Your Boring Money Manager,
Mowery Capital Management
We manage risks first
Then we buy quality
And only then do we seek to provide a reasonable return
At the time of this writing:
Dow Jones 24,340.76
S&P 500 2,654.18
Ten Year Treasury Yield 2.823%
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