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Afternoon Note

Nagging and Spooking the Market

By Charles Payne, CEO & Principal Analyst
4/13/2018 1:48 PM
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Lots of distractions this morning, including a tell-all book by the former head of the Federal Bureau of Investigation, James Comey, that takes a fair amount of cheap shots at the Commander in Chief.  I get that a lot of folks dislike President Trump, and its easy money dishing the dirt or innuendo, but it’s hard to believe this was the guy in charge of the FBI.

It’s certainly a distraction to trading today.

It’s not just Comey.  The street has been distracted by a lot of noise this week, including news of raids on Trump’s personal lawyer Michael Cohen’s offices on Monday.

At the time, the stock market was enjoying a strong move higher (see arrow), but in a two-hour period, the Dow Jones Industrial Average stumbled to close down four hundred points from 24,364 to 23,975.

Dow Jones Industrial Average


Impact of Noise

I continue to ask investors to focus on fundamentals rather than the noise, but that doesn’t mean the noise doesn’t have an impact.  In fact, Michigan Sentiment for April slipped in large part to concern about the so-called trade war.  It’s a small decline, but it is disappointing.  The key was concern over trade confrontation, which was mentioned by 29% of respondents:

That uncertainty, and all the reports of doom and gloom, pressured the expectations component lower.

Michigan Sentiment












Index of Consumer Sentiment






Current Economic Conditions






Index of Consumer Expectations







I believe the market is antsy with a lot of unknowns from a potential strike in Syria over the weekend and the clock ticking on tough trade negotiations with China, Canada and Mexico.

I think we can see the market surge early next week as we get more earnings, and even if there are military strikes in Syria, it should be viewed as a one-off and unlikely to mushroom into WWIII.

As an investor versus a trader, I find the noise disconcerting as basic economics are superseded by it, making investment decisions very difficult. While not trying to pick bottoms for buying or tops for selling, the volatility within a day or a minute makes each decision, from an investment standpoint quite complex. I look for probabilities of after-tax returns over time, and I want to make investments with high probabilities of those returns. While I haven't "won" on all of them, I have a reasonable return over time. And I don't want to become a trader, as if I wish to do that, I'll go to Vegas and play craps.

Joseph P Noga on 4/13/2018 3:31:18 PM
Charles, pres Trump announced WAR we are striking Syria NOW. Protect ALL. Thank USA military services . RTN stock, GD. Are all profit from the pain sufferers is Syria chemical weapons attack on civilians. Thank you FBN.

J on 4/13/2018 9:02:30 PM

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