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North American markets today, Wednesday, viewed several hours before opening at 9:30 a.m. EST, look set to open on a negative note as major indicators are in the red. To demonstrate the changeable nature and volatility of these indicators: they were all in the green when I began assembling this column but slid into the red before I finished. However, the NASDAQ and S&P 500 are borderline, and it is within the realm of possibility that they will move back into the green.
The European markets are open at time of writing and all major European indicators are in the red at time of writing. They also shifted while I worked on this column. The British pound is rising while the Euro and Canadian dollar are down.
This follows yesterday’s positive results driven by several factors such as boosts in shares of TESLA Inc. which rose $38.25 on the day to close at $849.44. following news of its India plans, Uber Technologies Inc. which rose $3.95 on the day to close at $58.54, following news of its plans to expand its electric vehicle and hybrid option to over 1400 new cities.
Shares in General Motors Company rose $2.81 on the day to close at $47.82, an increase that Reuters attributed to GM Chief Executive Officer Mary Barra’s plans for delivering electric commercial plans to FedEx by year-end 2021.
These increases – all of them pointing to future income -- reflect a major principle in market judgement according to at least one analyst. “On an average, markets look 3 to 6 months into the future about what environment we are likely to be dealing with, allowing it to push back on events in Washington last week and the surge in COVID 19 cases’ said Matt Stucky. portfolio manager, equities at North Western Mutual Wealth Management Company in Milwaukee. “There is a lot of bright news on the horizon on vaccine roll-outs and a likelihood of more fiscal stimulus in Washington,” he said in a Reuters report.
Looking at the present and future, market focus will shift increasingly to the reports of major banks. On Friday, JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. report fourth quarter results. The reports from JPMorgan Chase and Citigroup will provide at least some clarity into loans and spending by consumers and the near-term outlook. As well, there may be some glimmers on how the crisis is impacting foreign economies. Wells Fargo’s report will probably include clues on the corporation’s efforts for putting recent scandals behind –information that is at least as important as its outlook.
At the same time, investors, analysts and individuals can be forgiven for being spooked by recent announcements by the Federal Bureau of Investigation that armed protests are being planned for all fifty state capitals. An internal report obtained by several media says that these protests are planned to start soon and run at least until Inauguration Day.
While it seems unlikely that all 50 state capitals will erupt in protests, large-scale chaos in a significant number of states could cause economic damage, both in terms of the actual disturbance and any restrictions that follow. Washington D. C. Capital Police have warned of the potential for new attacks there. Even if the threats do not materialize, or do materialize in a lower number of locations, the fear element is there, and the Washington riots force all levels of government to take precautions.
While the possible outcome is certainly unappetizing, it should not affect investment decisions, explains Jay Nash, Senior Vice President at National Bank Financial in London. Nash says that these actions are likely to have limited long-term implications and that if they lead to a short, sharp sell-off it could present buying opportunities.
(This is not to imply that everything is wonderful. It’s not … certainly there is no shortage of worrisome forces at work and I’ll deal with some of those in the next column.)
Where does all of this leave investors? A recognition that these are the most volatile times in recent memory for those whose wealth depends in whole or in part on the stock market.
That equation rests only partially on the actual contents of a specific portfolio and partially on the individual’s investment discipline. At all times, it depends on the quality of professional financial advice and at this particular time, it very much also depends on the individual’s ability to avoid joining the current job loss figures and having to dip into savings.
Disclosure: I do not own any shares in any company mentioned in this column.
Related: A Blue Wave Will Require Investors To Re-Evaluate Their Assumptions for 2021