At the lunch hour, the markets are hovering around flat on the day as investors await President Obama's speech tonight as he addresses unemployment and outlines his strategy for job creation. From reading the speech highlights that the White House has already released, I see tonight as being a nonevent. I don't say that because of my own personal political views, but because of the comments that have already begun to come out from both sides of the Congressional aisle.
We are seeing more friction between the two parties, as highlighted in the report that the Republican Party will not respond to the administration's proposal on jobs tonight. In response, Representative Nancy Pelosi (Democrat) is quoted as saying, "The Republicans' refusal to respond to the president's proposal on jobs is not only disrespectful to him but the American people." In response, Republican House Speaker John Boehner's spokesman Mike Steel said the president's proposals tonight "will rise or fall on their own merits" and that a Republican response wasn't needed. Roy Blunt, Republican of Missouri, said to Fox News there will be no formal response as "the speaker doesn't expect to hear much to respond to."
As you can see, the political "rancor" is going nowhere, and as long as our elected officials continue to avoid compromise, the markets will remain in a tight and uncertain trading range. On the economic front, the jobs numbers that were released this morning were not very positive, and there is still a lot of chatter about whether or not we will fall back into another recession. As I've said, I do not currently think this will be the case, but the uncertainty of such is concerning to the markets. Also of importance, the price of gold is up over 2.5% today which shows that investors are weary of investing in stocks at this point. Despite the gains we've seen recently, the volume of stocks being bought has been minimal...hence why I've cautioned investors to try to be opportunistic and take small gains when they have them; cash is still the best place to be until we get more clarity on the direction of Washington and the economy in general.
Trying to forecasts how stocks will perform for the remainder of the year is difficult, and I remain agnostic as to whether now is the time to become aggressive and or conservative..that being said, I still believe that the market has bottomed for the year, but I do not expect stocks to make any sort of a meaningful advance during the upcoming last quarter. To reiterate, the best way to "play" the market is to be opportunistic, move in and out of the market, and try to focus your investments on high yielding dividend stocks and the special situations that I've mentioned here before (mergers and acquisitions).
On a bright note, GDP growth (Gross Domestic Product) numbers that were released this morning showed that the economy picked up slightly during the past month..."so I got that going for me, which is nice" - to quote Carl Spackler (Bill Murray) from the movie Cadyshack.
So in the meantime, lets keep our fingers crossed in the hopes that Washington can put partisan politics aside and get to work on making meaningful progress on the economic and job front issues.
