For 2014 I would like to wish all of you discipline and patience in your trading!
As I do from time to time, I like to share resources I feel are worthy of exploring, such is the one below by www.factset.com :
- US equities came under pressure this week as the S&P 500 suffered its biggest weekly pullback in over two years. Despite the magnitude of the move, there was not an overriding theme that captured the price action.
- Widely cited headwinds included Fed angst, geopolitical tensions, disappointing earnings, the latest flare-up on the Eurozone periphery, the slowdown in the housing recovery, Argentina’s default, fatigue, technical and continued worries about stretched valuations and crowded trades.
- However, there were notable pockets of reprieve surrounding some of these concerns, particularly when it came to monetary policy and earnings. In addition, geopolitics has not proved to be a sustainable directional driver, while the tipping point search has been in play for a while.
- While largely on the backburner, there were some positive dynamics at work this week. The pickup in strategic M&A activity continued, while there more signs of stabilization in China, where the Shanghai Composite bucked the sell off in global equities with a nearly 3% rally.
- There did not seem to be any great signals from the sector performance this week with the broad-based nature of the risk-off trade and company-specific takeaways from a very busy week of earnings. Energy and industrials put in the worst performance, while telecom held up the best.
Fed angst finds some reprieve:
- Worries about the Fed being behind the curve and the potential for an earlier and more aggressive start to the policy normalization process continued to get a lot of attention as a source of market angst this week. There were two particular areas of focus. One was the 4% growth in Q2 GDP, which was a full point ahead of the consensus. The other was the 0.7% increase in the Q2 employment cost index (ECI), which was ahead of the 0.5% consensus and marked the fast growth in six years. The hotter ECI print was of particular interest because it followed on the heels of an FOMC statement that hedged an upgrade of the assessment of the labor market by noting that a range of indicators suggest a significant underutilization of labor resources. However, there was some reprieve late in the week as average hourly earnings were flat in July, leaving them up just 2.0% y/y. This compared to expectations for a 0.2% m/m and 2.2% y/y increase. In addition, while a sixth straight month of nonfarm payrolls growth above 200K kept the recovery traction theme in focus, the 209K was slightly below expectations and not robust enough to impact liftoff expectations. Finally, despite the hype surrounding Fed fears, yields in the front and belly of the curve were actually lower on the week.