Independent, Fee-Only Financial Advisor
Thursday, August 18, 2011
The market clings to the economic calendar. Market price of stocks is based on roughly six months of expectations. As economic news rolls around, people adjust their views of what will happen in the coming months, and they value, buy and sell stocks accordingly.
Unfortunately for those who loathe volatility, the economic calendar is busy, and can easily be a mixed bag. A look at the Bloomberg version shows that there were 17 indicators, including 4 market moving events going on today. Jobs and housing reports came in bad (contrast that to last weeks good employment numbers) and core inflation was flat while the Index of Leading Indicators was up. Different reports cover different aspects of the economy and even different time periods (weeks, months or quarters back).
When the calendar is packed with this myriad of events, Mr Market can change his mind many times over the course of a week, swinging from high to low as he tries to figure out what lies ahead.
Posted by Ryder Taff, CFA