This Week’s Message: My Naïve Suggestion

So what happened Friday? Actually, it’s only 11 o’clock
Friday morning, but regardless of whether or not the Dow rebounds yet today
from its 300 point swoon, the question begs.

The past few weeks I’ve been suggesting that the market is
signaling an okayness about the inevitable next Fed rate hike. Today, if you
believe the headlines, makes that the most naïve suggestion. I.e., the press
has today’s selloff all about Fed voting members stepping up to the microphone
and essentially promising we’re on the cusp. Two in particular, Rosenberg and
Brainard — who’ve consistently been against any hasty moves — appear ready
to join the hawks and vote for a quarter-point move sooner than later.
The thing is, we were already getting strong signals from
the Fed that the consensus was converging on a September hike, and the market
was hanging in there just fine. Ah, but then came the jobs number, then the ISM
surveys that showed manufacturing contracting and services expanding at a
slower than predicted pace, then fed funds futures signaled the odds for September tanking accordingly. Thus, suddenly, the market got comfortable with the
notion that September ain’t happening after all. Then comes the Fed chorus saying
“not so fast”, September’s still hugely on the table. You know that old adage “the market hates uncertainty“.

Of course the above is just me angling for an excuse for today’s selloff, as it’s impossible for anyone to know for sure…

So, the short-term thinking traders who caught the Brexit
buying opportunity are taking this newfound uncertainty as their cue to take
some profits. The question for a whole raft of other short-term thinkers (never
you and me, btw) who missed the run up, is, do we take our second chance at
these levels and buy, or do we wait for, say, 2100 on the S&P, or maybe
2000, or maybe even lower? This morning’s video tells that story…
Okay, so what about you and me, us long-term, patient, diversified
investors? Umm, well, I think our characterization (long-term,
patient, diversified) answers that question.
Have a nice weekend!

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