As you may have discovered, these past two days the market has been quite erratic. My position is that in the coming 12 months the market will generally go up (US & CDN market), but tread carefully if you're looking for short to medium-term gains.
These are what's happening right now, it's sort of a mixed bag at the moment:
- Japan's market recently dropped ~7% due to weak Chinese data and Bernanke's speech about potentially cutting back their bond buyback program in the States.
- Long weekend for the U.S. in the coming days, investors don't like not being able to trade on Monday because there's more of a chance of something going wrong in three days compared to just two days, to mitigate this uncertainty and risk they are more motivated to sell off their investments today and reap in their current profits (whatever they have gained since they bought it a few weeks ago or whenever)
- U.S. April durable goods orders higher than expected, 3.3% vs. 1.5% (Reuters), signalling that the economy isn't all that bad, and in fact somewhat improving
- Unexpected decline in China's manufacturing data, as we know China's manufacturers directly affects the demand for raw materials, companies such as metal producers selling internationally will be negatively impacted. Not to mention, since a lot of other economies have production in China, lower Chinese manufacturing data could also signal a lower demand for consumer goods overseas (such as Canada or the U.S.). This is why China's weak data caused a worldwide sell-off, and its negative effect was further compounded by Bernanke's speech
- Bernanke's speech on Wednesday, as I have mentioned in my previous post, his uncertainty and lack of firm commitment to reassure investors about the continuation of the U.S. stimulus programs and bonds buyback program has led investors flocking out of fears that they will taper down their stimulus measures over the summer and potentially the rest of the year. Investor fears that this will stall growth
Good luck! All the best,
-TT
