I'm not going to comment on all issues this fine morning. it's January 4th 2016, and the market is down around 400 points (The Dow). For the past few minutes with the market in its opening hour—what I call the Amateur Hour—I've just watched, taking in the news, and more importantly, taking in the punditry, the surmisings and trying to sort through the facts.
All of this Is most difficult. I challenge everything. I take my 40 years of being in business, and almost as many years of watching and trading in the market, and try to connect the dots—looking for opportunities and pitfalls to avoid.
Let's look at the macro-picture. Two events have happened overnight. Both have left investors in the American Markets scrambling to make sense of it all. In short, we live in a dangerous world. Here are the two events:
- China's market closed for awhile. After 10 months of contraction, the government acted. GEt that? The GOVERNMENT. That is frightening. They control everything. A few key players were arrested a few months ago. They tighten and loosen like good Communist should in a "Command and Control" Economy. More on this later.
- Saudi Arabia has severed ties with Iran. This is very important. This pits Sunnis against Shia, and everything in the region is at stake. They're already calling it a Civil War. Good name, and fitting. I wish we would severe ties with Iran, but this administration is inept, naïve and just plain stupid.
Oil prices are up? This is appropriate for this state of affairs. Funny, as of late, when oil went down, stocks went down. That is mentally the opposite of the way it usually is. But today, stocks are down, oil is up. There is more demand and the supply is up.
Let's think this through. This will be our/my first attempt to separate myself from the punditocracy. Some people are always trying to be cute, with clever sayings, connecting things that do not ordinarily get connected. For example: They say oil demand has doubled (Proof? None given), and supplies (reserves) have increased four-fold. They pass this off as wisdom. I don't think so. One would have to know all of the numbers to make a connection. Okay, demand is up. Great. Supplies have increased, but that has little to do with the demand.
The more important point is that the Chinese economy is slowing, that is significant. But the Middle East in turmoil, especially with this feckless President, is very troubling and should be watched. What's wrong with American Energy Independence?
Stocks to watch: Alibaba (BABA), Baidu (BIDU), and from America, Nike (NKE), and Apple (AAPL). And then watch all of the high-tech stocks. Netflix comes to mind. They're growing, entering Russia, and their business model is top-notch. From Amazon to Google, to all of the Oil Stocks, all of this news will provide opportunities.
REQUEST: If you have a difficult time getting all of this, please read, "PICTURESQUE," an article I wrote earlier, and updated a few days ago.