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Reflecting Upon the Past Several Days, One Would Think Equities Would be Down a Gazillion Points.

Reflecting upon the past several days, one would think equities would be down a gazillion points.  To recap, little was accomplished regarding the Ukraine.  Jordon, perhaps one of the weakest Middle East countries is aggressively pursuing ISIS.  Greek is thumbing its nose at the ECB and is demanding German reparations from WWII.

The President submitted a budget that is beyond DOA and too many, is absolutely infuriating.  And then the jobs data where some Committee members are losing their patience regarding a change in monetary policy as it appears the doves reign supreme at the Federal Reserve.  And then there is oil and the dollar.

For most 2014 was a difficult year, partially predicated by the outperformance of passive index mutual funds.

Many times I have commented about locusts driving one sector higher at the abandonment of all other sectors and then leaving that sector for another.  The net result is higher indices but the typical stock grossly underperforming.  Will 2015 be the inverse?

Based upon current headlines, I would suggest yes a macroeconomic geostrategic thesis is perhaps even more important today than yesterday.

Yesterday the averages declined about 0.50% on concern that Greece’s rejection of the nation’s bailout terms can lead to fresh turmoil.  Crude and the typical stock rose.

Last night the foreign markets were mixed.  London was down 0.21%, Paris up 1.19% and Frankfurt up 0.86%.  Japan was down 0.33% and Hang Seng up 0.03%.

The Dow should open moderately higher as Greece is open to some type of compromise.  My thought—do they have any other choice as normally the debtor is beholden to the creditor? The 10-year is off 5/32 to yield 1.99% and oil is down $0.50/barrel.

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Ken Engelke

Chief Economic Strategist Managing Director

The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.