Daily Market Update – April 21, 2015 (Close)
Yesterday was an unexpected surprise and it helped to correct last Friday’s blight on April, which has been a good month, at least by 2015 standards.
The market is up about 1.5% for the month and is now less than 1% from its highs on the S&P 500.
By April standards, though, it still has a way to go, until meeting the average gains seen. In the 21st century, at least, April is by far the best performing month and is no slouch when looking at its performance over the past 100 years.
With still plenty of trading days left in April that 2.1% average gain is still well within reach, especially since a day like yesterday can add 1% in the blink of an eye.
This week and next will be an earnings reporting deluge and it started this morning, with a number of DJIA components beginning to chime in and helping the DJIA push forward again this morning in the pre-open futures trading.
That early optimism gave way, however, as the earnings of those DJIA components disproportionately weighed down that narrow index while the S&P 500 was only very mildly lower.
As today’s earnings were released for some key companies there are currently a number of common themes as earnings are being released, whether currency fluctuations are part of the equation, or not.
Companies seem to be missing on their top lines and not faring too poorly on their bottom lines. At the same time the buy backs continue to be announced. Forget about what Larry Fink said last week about those generous buy backs and dividend hikes, since those decisions were made by the Board of Directors before his comments and by the next quarter no one will remember, even foot-note fetishists.
But it’s clear that CEOs don’t know what to do with all of their money, as there’s no reason to expand or grow the businesses, as consumer or industrial demand doesn’t seem to be there yet. So they spend the money on buy backs, often when shares are near historic highs or near post-2009 highs.
It’s always easier to spend other people’s money, especially when share performance may be a metric by which you are being judged.
I don’t know if I’ll be around to have an opinion in hindsight, but as this market expansion is now 6 years old, you do have to wonder how long it continues and what, if anything, will be left in that rainy day corporate fund.
Warren Buffett had it right in 2008.
But I don’t know if corporate America has it in them to be greedy when others are fearful. They certainly didn’t in the 2007-2009 period when the market was crumbling. You didn’t see many stick their necks out and use shareholder’s money to buy back shares when they were becoming cheaper and cheaper.
Back then those kind of actions would have been taken to stem the tide. Now the buy backs are undertaken to go with the tide.
Which one of those sounds like it’s the work of a real leader? Any one can go with the flow, but it takes a real leader and some bravery to try and go against the momentum and take a stand.
As long as the market keeps going higher it’s hard to complain.
As this week will likely be nothing more than whatever earnings allow it to be, I hope that the upward trend continues. I’d like to see some more assignments and I’m not certain that I want to make too many more purchases, especially as the trend may take the market higher.
In that case, I’d rather go along for the ride, too, and follow that tide.