Are There Problems Everywhere?

 
The winds of perception are clearly changing on Wall Street as Mr. Market has turned gloomy.  Like a young child who cries one minute and is happy the next, global investors now see the world as full of all kinds of problems.  First on the list has to be the potential U.S military involvement in Syria and all of the possible repercussions from an intervention.  Obviously, the recent two day jump of oil prices gives a hint at how Syria can affect the price of an asset class or specific commodity.  Even further, the emerging market currency rout in India, Brazil, and Indonesia underscores the idea that capital is now flowing towards the appearance of safe harbors.  Yet another example of an area which is being seen as troubling is housing, where the spike in interest rates of the 10 year Treasury bond to nearly 3% has put a chill on red hot home building stocks.  If we add to this cocktail a sprinkle of the woes of the retail industry, where Ambercrombie and Fitch, Target, Wal-Mart, and Sears issued disappointing financial results, well, the recent downturn in financial markets across the globe could be seen as understandable.



A little bit further on the horizon is the debt ceiling negotiation at the beginning of October in order to prevent the United States Government from shutting down.  You can rest assured the usual cast of characters will parade to the television cameras to warn us all of the impending world doom if our country is not allowed to borrow more money.  The excitement of seeing Barack Obama and Harry Reid on television again might be too much to take for any sane person, let alone a rational one.



One thing I want to highlight is how the potential conflict in Syria should only reiterate how crucial energy supplies are as a strategic resource for any sovereign country.  One of the reasons why oil prices are spiking is the logistical importance of Syria within the Middle East.  Syria itself is not a major oil producing country, but Iraq, Libya, Iran, and Saudi Arabia most certainly are.  Any supply disruption in any of these countries changes the aggregate output on the oil market.  The transport of oil by pipelines and ships are the major transportation methods used to move 'black gold', and a military conflict only makes it incredibly difficult to get it from point a to point b.  As such, the longer the United States is potentially engaged, or actually participating, in Syria the more I would anticipate oil prices to rise. 

 

 I would expect September to be a very interesting month in the global financial markets as the full range of market participants will be engaged and actively participating.  Summer is winding down and many money managers will return from the Hampton's, or wherever their second or third houses may be.  Trading volumes will probably rise dramatically as the past few weeks it has been very minimal.  The recent outage at the NASDAQ is not helpful in trying to restore confidence the public might have in the integrity of capital markets.  When you look at opinion polls by those who consider investing, many still are very skeptical of Wall Street and what transpires there.  I consider it a shame because investing is still an activity which is can help change peoples lives for the better if it is done well. 

 

A great story on Marissa Meyer, how she got the job at Yahoo, and her efforts to change the whole business-http://www.businessinsider.com/marissa-mayer-biography-2013-8


 

An interesting attack on a company it seems can do no wrong- http://www.bloomberg.com/news/2013-08-28/costco-s-second-class-citizens.html




Even though they may deny it, the investment banking window is always open for IPO's-http://www3.cfo.com/article/2013/8/capital-markets_ipo-window-equity-markets-timing-vix-bookrunner-pricing-underwriter-share-price


Thank you for reading the blog this week, and I hope you have a great Labor Day Weekend!

Y H & C Investments, Yale Bock, and the family of Yale Bock own positions in securities mentioned in the blog post. Investing in stocks can lead to the complete loss of your capital. As always, on any company mentioned here, past performance is not a guarantee of future returns. Investing involves risk of losses on invested capital. One should research any investment and make sure it is suitable with your objectives, risk tolerance, risk profile liquidity considerations, tax situation, and anything else pertinent to your financial situation. Also, the CFA credential in no way implies investment returns will be superior for any charter holder.