August 5, 2014

The Markets

Last week, investors took a long look at the crazy quilt of information and events around the world and decided they didn’t like what they were seeing.

Geopolitical tensions puckered a lot of seams: Conflict in Ukraine was embroidered with additional sanctions against Russia, difficulty investigating the downed commercial airliner in Ukraine, and escalating anti-American rhetoric in Russia. Violence continued to roil through Middle East and North Africa. In Libya, hostilities escalated, causing many western countries to withdraw diplomats and leading Tunisia to close its border with the country.

Financial and economic issues overseas, including ongoing issues with one of Portugal’s largest banks, and worries that European companies will be negatively affected by sanctions against Russia, marred investors’ views, too. In addition, controversy swirled around Argentinian bonds.

Positive news in the U.S. offered some padding. The U.S. economy continued to recover and gross domestic product increased by 4 percent (annualized) during the second quarter which was a remarkable improvement after first quarter’s contraction. Reuters reported, “Consumer spending growth, which accounts for more than two-thirds of U.S. economic activity, accelerated at a 2.5 percent pace… Despite the pick-up in consumer spending, Americans saved more in the second quarter… which bodes well for future spending.”

By Friday, U.S. markets had experienced a strong decline so let’s see how that plays out over the next several weeks.

Weekly Focus: A Timely Quote

“We’ve long felt that the only value of stock forecasters is to make fortune tellers look good.”
-Warren Buffett

Image courtesy of Aotearoa used in accordance with the Creative Commons ShareAlike 3.0 Unported license.

Recent comments