Risk/Reward Vol. 392
THIS IS NOT INVESTMENT OR TAX ADVICE. IT IS A PERSONAL REFLECTION ON INVESTING. RELY ON NOTHING STATED HEREIN.
In what has been described as the oddest earnings call in recent history, Elon Musk of Tesla fame stated the following on Wednesday: "I think that if people are concerned about volatility they should definitely not buy our stock.... Do not buy it if volatility is scary." The same words could have application to the market in general if the future mirrors this week's activity. Talk about a pogo stick. Moves of 300 and 400 points in and out of green and red characterized Monday, Wednesday and Thursday. A negative 125 point opening on Friday was wiped out in a matter of minutes, and the day closed up 332! Bulls chased bears and bears chased bulls. The talking heads on CNBC, FBN and Bloomberg changed tunes quicker than a Jock Jams Dance Mix.
What happens day to day or even week to week is of less concern to me than what happens in November. As I have written in the past, I believe the greatest threat to Mr. Market is a change of control in the House. I have no doubt that should that occur, impeachment proceedings will ensue forthwith. God only knows what Mr. Mueller has compiled during his investigation, but it can't be good. And The Donald's threats aimed at the Special Prosecutor and the Justice Department are not helping his cause. Should he make a move against either, Mr. Market surely will swoon.
Of more interest to me (no pun intended) is the bond market. As reported this week, consumer prices as measured by the Fed's favorite gauge, the PCE Index, hit the magical 2% number in April. If we see this number continue and or increase in coming months, look for the Fed to raise rates 4 times this year. Indeed, this week's report caused the future's market to place a 50% probability on this occurring. Meanwhile, CD rates continue to inch upward with insured two years paying as high as 2.75%. C'mon baby!
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