Weekly Recap & Outlook – 06.21.13

Tower Private Advisors


  • Not much, a short one
  • Markets weren’t kind to my bold forecast of low rates for a while

Capital Markets Recap


“Nah, let’s wait for a pullback…”

“I’m keeping some powder dry…”

“Looking for a buying opportunity…”

Well, you got it, now what?

“Oh, man, this sucker’s got further to go.”

Every investor and her mom is waiting for the proverbial buying opportunity. ‘Get it in the form of lower prices, and suddenly the sky’s falling, and there’s every reason stocks will go lower. It’s not as if buying opportunities just materialize. They’re always sparked by something…lot’s of folks are looking for selling opportunities and sometimes the buyers just go on strike.

Ostensibly, this correction started on Wednesday afternoon when Chairman Ben said that the Fed would likely ease off its bond-buying pace, although that assumed the economy would continue to improve. Well, duh, it’s not like the Fed will buy bonds forever. If traders were shocked by that revelation, then they’re stupid. Still, we must have reasons for things, or the financial media would have little to talk about…”why’s the market down?…[trot out speaker one].”

There is, apparently, some tension in China, where the inter-bank lending rate–the rate at which banks lend to each other overnight–has spiked up to double digits, suggesting the banks there don’t trust each other to pay back the short-term loans. That sort of thing happened here in the depths of the U.S. financial crisis, when our economy almost seized up.


We remain of the view that the correction will be just that, a mild correction.


Today’s action, highlighted by the orange arrow, portrays a tale of two cities, where the market closes almost where it opens–slightly higher–and where the swings on the day are relatively wide.

Here’s the market action over the last several months. Even with yesterday’s shellacking, the S&P 500 is down by just 5.5% or so…merely a flesh wound, although today’s bounce isn’t terribly convincing.

 Oh, and I probably shouldn’t mention this, but markets were not kind to my forecast of interest rates staying low, as is on display below. The 10-year Treasury Note’s yield is 17.3% higher from when I said there’s no need to feear higher rates. Annuallized, that’s 6,000%+ increase. Still, I’m sticking with the idea. Rates aren’t headed higher just yet.


Graig P. Stettner, CFA, CMT
Chief Investment Officer
Tower Private Advisors



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