The Stock market had a choppy week, ending slightly lower after seven weeks of massive gains. While the movement in oil was still a big influence, currency market and US government meddling brought some wide swings. Where to now for the financial markets? To hear more commentary, many charts, viewer emails and Slim’s Short-term view, be sure to watch the video below, “Market Week” and further commentary on the Financial Markets Below that.
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Start with the dollar/yen: Japan basically said they are front loading fiscal spending, in a “kitchen sink” effort to stimulate their economy. Investors took that to mean, for now, that there would be no attempt to lower the value of the yen. That sent the yen soaring vs the dollar and scared the markets. Gold jumped on Tuesday and Thursday, both days the yen surged. The bond market was also stronger as investors were thinking “safety first.”
Oil made its low early in the week, touching $35.25 a barrel. The rest of the week saw an advance, as Wednesday’s inventory numbers brought a surprise drop, Friday capped off the big week with a 6% upside explosion, with oil again approaching $40. In oil, these days, “volatility” is the word.
While Thursday’s big drop in the stock market can be blamed on the dollar/yen, some participants blamed the Obama administration. They passed a rule, aimed right at the Pfizer-Allergan merger deal, which was intended to stop “serial” corporate inversions. Allergan is from Ireland, where they have a 12.5 tax rate. Plainly, they won’t change tax laws that encourage US corps to leave. It’s a sad situation, hopefully solved by the coming election. Well, they got what they wanted, as that deal was called off.