InvestingDaily.com

Account Information

  • My Account

    Manage all your subscriptions, update your address, email preferences and change your password.

  • Help Center

    Get answers to common service questions, ask the analyst or contact our customer service department.

  • My Stock Talk Profile

    Update your stock talk name and/or picture.



Close
FEATURED STRATEGY

Get rich from the world’s most BORING stocks

Get rich from the world's most BORING stocksWhen you buy these dependable Steady Eddies, you’ll see why “boring is beautiful.” You’ll fall in love with the 39 “stodgy” stocks currently in my portfolio… because they’ve racked up an average gain of 455%. That’s enough to turn $10,000 into a staggering $55,500! These “yawners” can slam the door on your money worries. Click here to get started now.

 

Welcome to the Tantrum Zone

By Linda McDonough on September 13, 2016

After stocks nosedived last Friday following hints that the Federal Reserve would raise rates, every word from Fed Governor Lael Brainard’s speech Monday were scoured, sifted and sniffed for meaning.

Fortunately, sulky investors received this pacifier: Brainard said the case for a preemptive rate hike was “less compelling.” For clarity, in Fedspeak that’s the equivalent of Ronald Reagan’s: “Mr. Gorbachev, tear down this wall.”

The relieved market performed a 30-point rally in the S&P 500 Monday, putting a dent in Friday’s painful 2.2% drop.

But while odds dropped that the Fed will raise rates at its next meeting, I don’t think the market has the all clear sign. Based on Friday’s tantrum we’re likely to see more selling fits each time there’s a mere hint of a rate increase.

We’ve been warning subscribers for weeks that the market was acting like an overtired toddler and meltdowns are inevitable. Friday was a perfect example that the market needs a long nap. Fed Chairwoman Janet Yellen made what we thought was a crystal clear prediction regarding the long term direction of rates a few weeks ago, but investors were jolted last Friday by comments made by two Fed officials. Boston Fed President Eric Rosengren and Fed Governor Daniel Tarullo both said that a rate increase would be a reasonable path to avoiding an overheated economy.

That was enough to cause S&P to drop 10 on the open and faltered another 20 points by lunch. By late afternoon the market was in full tantrum mode. It let loose its highest volume and most severe selling for the final hour, which left the S&P bludgeoned a painful 52 points by the close.

In addition to the semantic dissection of Fed Governor Lael Brainard’s speech, the timing was worthy of analysis. This speech was not on the Fed’s formal calendar, and as of early last week it was not a scheduled appearance. Just last Thursday, the Chicago Council on Global Affairs issued a press release announcing that Lael Brainard would be speaking on Monday.

Investors worried that the Fed, which has become increasingly sensitive about not surprising the market, was planting its last hint before the one-week quiet period that precedes its September 20 to 21 meeting.

Yet there was little need to panic. Brainard, a Fed policy dove (those that lean toward low rates and restraint on rate changes), expounded that the risk of strangling economic growth with higher rates outweighs the risk of inflation.

Regardless of the outcome of the Fed’s meeting next week, I expect volatility to pervade the market.

And  I plan to use pockets of weakness to open new positions at fair prices in my Profit Catalyst and Growth Stock Strategist portfolios, and spikes to buy puts on my favorite shorts.

There’s no way to avoid breaking into a full sweat when your child throws himself on the floor of the supermarket because he can’t have that candy bar. But most seasoned parents agree that staying calm and carrying on can get you through even the most unnerving outburst.


You might also enjoy…

 

Obscure Tax Law Forces This Company to Pay Out 90% of its Profits

A 50-year-old loophole is forcing one company to pay out $9 of every $10 it makes from ironclad contracts with the U.S. Government.

In fact, over the past seven years, it’s made payments ranging from a few dollars… to tens of thousands of dollars… 30 times. Without a single cut! 

Most folks don’t even know this company exists, but the ones that do are making a mint.

Like Ted B., who’s set to receive a check for $1,096 just a few days from now.

Merrill H., a 58-year-old from New York, has collected over $3,385 so far. 

And retirees Beth and Terry P. have raked in $16,555.

I’ve put together a special report that will give you all the details, including simple instructions on how to get your name on the payout list before the next cutoff date.

You can get your copy here.

Stock Talk — Post a comment Comment Guidelines

Our Stock Talk section is reserved for productive dialogue pertaining to the content and portfolio recommendations of this service. We reserve the right to remove any comments we feel do not benefit other readers. If you have a general investment comment not related to this article, please post to our Stock Talk page. If you have a personal question about your subscription or need technical help, please contact our customer service team. And if you have any success stories to share with our analysts, they’re always happy to hear them. Note that we may use your kind words in our promotional materials. Thank you.

You must be logged in to post to Stock Talk OR create an account.

Create a new Investing Daily account

  • - OR -

* Investing Daily will use any information you provide in a manner consistent with our Privacy Policy. Your email address is used for account verification and will remain private.