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2/1/2016

Well, it took a few days, but the relief rallies we mentioned in both Crude and to a larger extent, US Stocks followed through nicely.  Despite those short term positives, there were two very important events that depict the risk and fragility of the economy.  The most noteworthy event was the BOJ going to a negative interest rate policy.  The reasoning…how about a weaker Yen, greater trade strength and propping up the Equity market.  This sends a big red flag from one of the largest economies.

The second event involved the surprise miss in earnings from tech powerhouse Amazon and the resulting slamming of the stock.  Amazon’s dominance in retail has no doubt been noted by any major player in the financial world or world of commerce in general.  It’s interesting to see the continued slim operating margins despite the perceived outperformance by this behemoth.  Keep an eye on big tech earnings from here on out.

Could see a bit more bounce in Stocks, but the higher they go, the more risk is built into prices.  Longer term is lower for the sector. Oil…no clue from here.  The relief trade already occurred.  Gold…still sleeping but keep an eye out !

Isn’t it nice to have the Doc back J

 

Stephan Kudyba (MBA, PhD)                      THE MARKET DOCTOR

 

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