Tuesday, July 8, 2014

The "wall of hatred"

What is behind investors’ apprehension toward stocks?  A combination of concerns ranging from fears of a speculative bubble in small cap stocks to misgivings about Fed policy to geopolitical instability and rising oil prices is putting a lid on investor optimism.  Michael Purves of Weeden & Co. was quoted by Businessweek as calling this phenomenon the “wall of hatred.”  That’s as good a description as any to describe the mass feeling right now….

On a related note, a new Gallup poll revealed that fewer Americans are satisfied with their level of freedom.  The report ranked the U.S. number 33 in the world in the freedom poll.  A separate poll by Pew Research found that the percentage of Americans who believe their country “stands above all other countries” dropped from 38% in 2011 to 28% in 2014.  Only 15 percent of 18-29 year-olds said the U.S. is the world’s leading nation. 

Rick Newman writing in Yahoo Finance commented: “The recession that ended in 2009 ravaged the economic fortunes of many American families, with median household wealth still about 40% lower than it was before the recession.  Jobs have finally started to return, but for many workers, pay is lower than it used to be.  People feel they’re falling behind, and the data show they’re not imagining things.  That’s a loss of economic freedom, which impacts other choices.” 

The latest Gallup and Pew Research polls provide even more insight into the currently depressed psychology on Main Street.  This jibes with the above mentioned investor sentiment surveys which reveal a decidedly negative view of equities....

[Excerpted from the July 7 issue of Momentum Strategies Report]