PrimeRates Market Talk: Higher We Go? China And Europe Upbeat

Or at least relatively so. The so-called Chinese reforms will have to be seen to be believed of course, but for now the markets like what they hear for the most part. Additionally, Europe had some nominally upbeat trade numbers and the markets seem to like them. Not much data to start the week although we will be in for some more blather from Fed officials. And, let’s face it, The Fed is running the bulls for the moments (years?) so any and all data points are seen through this prism:

Craig Erlam, markets analyst at Alpari U.K., said markets are continuing to build on optimism surrounding the Fed’s bond-buying program. “There’s no doubt that it has been a huge contributor to the rally this year and Janet Yellen’s testimony last week suggested it’s going to carry on, in its current form…As long as the Fed continues to pump $85 billion per month into the financial system, traders will be bullish on stocks,” he said in emailed comments.

Well, yes that is it exactly. While quotes like this one are common, not many people want to confront the two most salient questions: Why does The Fed still need to be doing this stuff after five years and what happens when it ends? Granted those are unpleasant thoughts and all traders are concerned about is the here and now, but for the longer term investor it may have an unhappy ending. Still, that is in the future (probably) and for now futures are heading higher and the 16,000 Dow talk is going strong.

Look for a lot of holiday sales chatter beginning today as black Friday is less than two weeks away. As any experienced investor knows, the cable news and business channels will have all sorts of opinions on the upcoming fortunes of the retail sector. This will be extrapolated to reflect the whole economy in various degrees of believability. Markets are most often driven by this type of analysis, at least in the short term. But don’t forget, a day or two after the numbers come in, they are largely forgotten and all of those analysts who said they were of utmost importance will be on to the next set of data. That is not to say they are not worth paying attention to or that retail sales may not have a huge upside or downside surprise, it’s just that it is more important to have your portfolio prepared for all scenarios. As always. Have a great week everyone!

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