The Week Ahead: Interpreting Mixed Signals
Jeff Miller | Apr 22, 2013 12:30AM ET
The daily news from financial markets is often merely a footnote to events. Last week this was truer than ever.
If you are a market professional, it is your job to consider the effect of any event. The individual investor should have a different attitude.
My forecast for last week – that the market would focus on earnings – was very wrong. The "Boston effect" was obvious on Monday and had a continued presence throughout the week. This has an effect for chart watchers.
The coming week will provide more reports on earnings, as well as a time for reflection and analysis. So far, the signals have been mixed.
I have some thoughts on how to cope with this which I'll report in the conclusion. First, let us do our regular update of last week's news and data.
Background on "Weighing the Week Ahead"
There are many good lists of upcoming events. One source I regularly follow is the provides this chart of returns from various investment choices:
He concludes that the "market is very worried about recession" since that is the only justification for such a wide yield disparity. This is the reason that I have highlighted important recession forecasting techniques – those that have accurately predicted the continuing expansion.
The next step will be an increase in inflation – which the Fed is actively seeking – and interest rates. This will be bad news for holders of bond mutual funds and the currently popular grandma stocks.
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