March 12, 2018 Goldilocks

Risk/Reward Vol. 384

THIS IS NOT INVESTMENT OR TAX ADVICE. IT IS A PERSONAL REFLECTION ON INVESTING. RELY ON NOTHING STATED HEREIN.

All three of the major indices rose at least 3% this week with the NASDAQ hitting an all time high on Friday. But as has been the case this past month, the path was anything but smooth. Gary Cohn's resignation over the Trump tariff proposal sent shivers through Mr. Market who temporarily headed for the door mid week. But a "Goldilocks" jobs report on Friday salvaged the week with the Dow rising over 400 points that day. As detailed in the last edition, job figures promised to have an outsized impact on the market because last month's reported spike in wages spread inflation fears, caused a jump in interest rates and precipitated a true (although short) market correction from which we have yet to fully recover. Why Goldilocks? Because it was not too hot and not too cold. Not too hot because wage growth moderated thereby cooling inflation fears, and not too cold because 330,000 jobs were added as job participation rates improved.

So what do I see in the coming days? Given that February saw record withdrawals from equity funds and that the Dow and the S&P are still 3-4% below their January highs, I see room for market improvement. But it likely will not be a smooth ride. I started this publication eight years ago, and I have never seen any time like this. The markets don't swing weekly or even daily anymore; they swing hourly. Blame it on our unpredictable President, blame it on an "on the hour every hour" news cycle, blame it on the Special Prosecutor, heck "Blame It On the Rain" (remember Milli Vanilli?). Cause notwithstanding, volatility is upon us. For the foreseeable future, investing will not be for the faint of heart.

Well that's it Folks. Sorry for the shortened edition, but am boarding a flight to a subscriber conference in Beaver Creek, CO. Given its attendance list and its seriousness of purpose, I have no doubt that I will return ever more enlightened. P.S. Never book a flight that boards at 5:15 am the morning of Daylight Saving's "move forward."