MV Financial Blog

Posts published in November 2012

MVCM Midweek Market Comment: Reasons to be Thankful

November 21, 2012

By Masood Vojdani & Courtney Martin

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Every day we watch what is going on in the world and are constantly given reasons to be concerned, stressed and worried about our immediate futures and beyond. As we get ready to celebrate this traditional holiday, it is a good time to remind ourselves that we do indeed have many things about which to be thankful and to focus on those. Here is a variation of these sentiments as they relate to what is going on in the economy and world markets.

In 2012 there were many reasons for markets to potentially melt into panic. The ongoing crisis in Europe, persistent economic troubles in the US, volatility in China and other developing markets, and the uncertainty around the US elections all threatened to impact the market in a severely negative way. Yet as we head into the Thanksgiving holiday the S&P 500 is up just over 10% year-to-date, and brief periods of heightened uncertainty have been tempered by long stretches of relatively low volatility growth. Of course, this does not mean that we are out of the woods, and vigilance remains the order of the day. But it is important sometimes to step back and remember that more often than not the worst case does not eventuate even when the news would sometimes suggest otherwise. Revolutions don’t happen more often than they do happen. For that we can be thankful.

The election was bitterly contested and often depressing in terms of the quality and temperament of the discourse. But as we move beyond the election into the challenges that lie ahead in the coming years, we can be thankful that we have robust mechanisms in place to keep the basic integrity of our political system intact, certainly relative to just about any other example you could imagine. Fortunately we Americans have a strong optimistic side to our character which gives us confidence that in the end we can figure out and solve our most pressing problems.

No doubt we will have more in the way of caustic commentary on events around us as the days and weeks progress. But for now, we simply want to be thankful for the things for which we can be thankful, and to wish each and every one of you a safe, healthy and happy Thanksgiving.

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MVCM Midweek Market Comment: Election Fever Breaks, Eurozone Jitters Return

November 6, 2012

By Katrina Lamb, CFA & Courtney Martin

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Now that the election is over and done with, US investors have turned their focus once again to the looming fiscal cliff and deepening recession in Europe – and their reaction has been anything but kind.  At close on Wednesday, the Dow Jones Industrial average was down a whopping 313 points, once again bringing it below the 1300 mark.

Much of this negative reaction was brought on by comments by European Central Bank (ECB) President Mario Draghi, who discussed concerns about Germany, the Eurozone’s biggest economy. A 1.8%month-on-month fall in industrial production as well as a 3.3% decline in factory orders have resulted in the European Commission reducing Germany’s 2013 growth forecast by around half – it is now expected to grow 0.8% next year rather than the previous estimate of 1.7%.

Most disconcerting about these numbers, as Draghi stated, is that “Germany has so far been largely insulated from some of the difficulties elsewhere in the euro area”. However, these new reports and growth estimates suggest that the Eurozone’s largest economy is not immune to the problems that have been plaguing other member countries for quite some time now; most notably “deplorably high” unemployment , a weak economic outlook and a an ongoing three year long debt crisis.

The European Commission’s 2013 growth prediction for the rest of the Eurozone countries is not any better – a paltry 0.4% growth is expected, barely above recession territory.

But investors shouldn’t necessarily panic – this sentiment is vastly different from the lead-up to Draghi’s star turn in late July  when he succeeded in gaining approval for the ECB to conduct sovereign bond-buying programs intended to reduce market volatility and borrowing costs for struggling Eurozone countries. The best advice for investors in our opinion is to stay disciplined and watch how the various economic concerns in both the US and Eurozone continue to play out. If we can get through the next couple months without a worst-case scenario playing out it could lead into opportunities for growth in 2013.

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