Current (World) View

The market continues to impress and is currently within a whisker of its all-time high. These levels were hit around mid-August… But it is an impressive display of resilience that it hasn’t gone down amid recent $100 crude oil prices and a 5% ten-year Treasury rate. In the short term, these two things can be troublesome to the markets.

Oil and interest rates eclipsed these “troubled ranges,” last week. But the market held tough, and this week oil prices have fallen back down to near the $90 per barrel level because of Middle East peace hopes. Who knows how that will go in the weeks ahead. Prices could potentially shoot back up; but, I believe caution is in order. Also, considering the mid-term elections in early November, being conservative, especially now, makes sense to me. Due to these uncertainties, a good-sized allocation to cash is the prudent thing to do (we have accomplished this by taking some profits along the way and only making a couple of purchases).

But there is a counterbalance to the recent troubling developments of oil, politics, interest rates, and the Fed. Earnings are killing it and most analysts expect them to remain strong through the rest of the year. The economy is solid. And oil prices are expected to significantly retreat at some point in the next several months. As a result, we will continue to look for tactical ways to enter those companies we feel strongest about. Stay tuned!

All the best,

Scott