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MARKET ROUNDUP
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 The era of good feelings continued in stocks for a third day, with the Dow Industrials up 18 points on the day to 16,943 and the S&P 500 up around 2 points to 1,951.The Dow Jones Industrial Average and S&P 500?
Record highs.
The Dow Jones Transportation Average?
Record high.
The Dow Jones Utility Index? Just about there. Even the Nasdaq Composite Index is closing in again on its bubble-era peak of 5,140 from March 2000.
Heck, we just saw Apple (AAPL) split its stock 7-for-1. That’s the kind of big-time stock-splitting we saw with incredible frequency in 1998, 1999 and early 2000 when stocks like Qualcomm (QCOM) were moving in $50 and $100 daily increments!
In fact, the S&P 500’s bull market is now entering its 62nd month. If it manages to rally for just two more months, it’ll be the longest bull market in the last 85 years! We haven’t seen a 10 percent correction since all the way back in the summer of 2011.
Merger-and-acquisition activity is continuing to boom as well. Just today, mega-drug firm Merck (Weiss Ratings: MRK, B) offered to buy Idenix Pharmaceuticals (Weiss Ratings: IDIX, D) for $3.9 billion in order to get its hepatitis C drugs. The $24.50-a-share bid was more than triple Idenix’s pre-bid price!
We also learned that Tyson Foods (Weiss Ratings: TSN, A) raised its bid for Hillshire Brands (Weiss Ratings: HSH, C+) yet again, to $63 a share. That equates to a price of $8.6 billion including debt, something Tyson hopes will be the last step in the frantic M&A process.
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| The S&P 500’s bull market is close to becoming the longest running bull market in the past 85 years. |
About the only market that’s not setting all-time or multi-year highs is the market for VOLATILITY! The “VIX” index that tracks stock volatility just sank to 10.7 at the end of last week. We haven’t seen anything like that since the very tail end of the last bull market in 2006-07. A separate Deutsche Bank analysis pegs markets as being swept up in the extreme “mania” phase.
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“I’ve gotten much more selective as the bull market ages and complacency ramps higher.” |
Me? I have started recommending my subscribers take profits on positions into strength … add protective stop-loss orders … and zero in more on higher-rated stocks in powerful sector bull markets. Or stated another way, I’ve gotten much more selective as the bull market ages and complacency ramps higher.
I can’t tell you if this party ends tomorrow, next week, or next month. But it’s getting a little too loud, the crowd is getting a little out of hand, and the risk of the cops showing up and shutting things down is rising with each passing day.
| OUR READERS SPEAK |
I appreciate Mark Najarian stepping in on Friday, and I trust you got a lot out of his analysis of the investment merits of Brazil. Many readers cited government corruption, challenges in the mining sector and other factors as key investor headwinds.
Reader Alan B. summed it up by saying, “There are better places and sectors so why take a chance? Check any major list of top stocks and see how many are based south of the border!”
Reader Dani added that out-of-control housing inflation … and inflation in general … are major drawbacks to him. He added:
“Brazilians buy everything on credit, even their clothes! But this is no wonder as the whole boom of the last ten years was based on easy consumer credits and the need of China for Brazil’s commodities. The average Joe in Brazil is so heavily indebted that he has to use almost half of his monthly salary just to repay his credits.
And he said: “One of the main problems of Brazil is also competitiveness. The quality of the products ‘Made in Brazil’ is rather poor. So if they cannot compete on quality they have to be competitive on price. But that’s also not possible because of a rather expensive work force and all the taxes, fees, regulations etc. from the government. This makes it difficult for Brazil to compete on the global market.”
Still, the eyes of the world will undoubtedly be focused on Brazil beginning this Thursday with the start of the World Cup. We’ll have to see if the face that Brazil shows the world is a positive one or not. If you have any additional thoughts, be sure to share them below.
| OTHER DEVELOPMENTS OF THE DAY |
 Taliban gunmen raided the main airport in Pakistan as part of a terrorist attack. A total of 29 people died, including the attackers, after a lengthy gun battle with security forces at the Karachi airport.
The U.S. created 217,000 jobs last month, the fourth-straight reading above 200k. That hasn’t happened since the economic boom in 1999. Unemployment held at a five-plus-year low of 6.3 percent.
Now in Paris, it just caused a railing to collapse on the Pont des Arts. I hope they don’t get rid of the tradition though – seems appropriate for a city so associated with love.
Reminder: If you have any thoughts to share on these market events, all you have to do is enter them below.
Until next time,
Mike Larson
Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.
{ 9 comments }
do you have any comments on the business practices and possible consequences at GSK thanks jack
How can you keep taking the jobs numbers seriously when about 200,000 of the 217,000 were created by the government with the birth death model. These numbers are a total joke. I know the newspapers play it up, but I don’t make decisions based on government numbers anymore.
I am a U.S.Citizen from New York, who has resided in Argentina since 1989..I also spent from 1960/1969 on Wall Street when it was a moral & ethical industry..If one is looking for sharp investments, I am waiting for this extremely rich country to go bankrupt, and then in 8 years, it will be able to feed the world. Yes, I am exporting food products to the USA,Canada & Japan..I also have investments in precious metals and a number of Canadian Mining Stocks, whose interests are in Argentina…I calculate that Argentina`s Bankruptcy will occur in September, 2014…
Mike Larson, I enjoy reading your SAFE MONEY Reports..Best regards, Ronnie Bloom
Mike,
It isn’t rocket science. The Republicans are losing and the stock market is going up. If you think of the Stock Market Crash and Depression of October 2007 as 1929 (both under Republican domination – Hoover and Cheney/bush) and 2009 as 1932 where the voters, once again, threw out the Republicans and voted in FDR and Obama along with Democratic Majorities, it becomes much clearer…..
Incidentally, the LONGEST and GREATEST uptrend in the DJI in our history occurred between 1932 and 1982 under mostly Democratic domination……
Larry Edelson has repeatedly said that the DOW is going to 30,000. Now that the European banks have instituted negative interest rates, there is hardly any place one can put their money but in the stock markets. Watch how fast money gets funneled into the DOW. How long will it be before US banks, and all the banks around the world do the same thing with negative interest rates? One of these days, Larry just might tell us, “See, I told you so.”
Why do you say that the bull market started in 2009? That is not true!!!!. When the DOW hit 14,500 in 2007 that was the most recent high until last year when it was surpassed to today’s 16,500. Many, many, many time the market will go down and then come back to old highs only to fall again. When that happens it is called a bear market rally. So, to be accurate, we are in the first year of the bull market. It seems this market has legs that are going to take it higher.
83 months of this current bull market. What nonsense!!!
Deutsche Bank is offering rights to acquire additional shares as “Rights Offering” they are expected to issue 300 million new common shares in the Rights Offering. The newly issued Deutsche Bank AG common shares will be fully fungible with existing common shares and will be entitled to dividends. What does fully fungible mean, it’s not in the dictionary.
What to do?
You have Jon Markman saying there are still large market gains ahead, but you are talking about caution and a nearing market top. I tend to agree with you, but I have a hard time understanding the clear conflict between your opinions in the same organization.
I hear so many scary things of what will happen after July 1st When the senate bill 2847will go into effect. Do you have any thoughts about it ?