Thursday, April 28, 2016

Economic Journal - Thursday, 4/28/2016

(as of 7:00 AM PST)

Global financial markets shuddered overnight after the Bank of Japan's Central Bank did nothing! The lack of a positive stimulus boost caught almost everyone by surprise and markets reacted violently, similar to the 'taper tantrum' we saw in the fall of 2014 when the US Central Bank went against investor expectations.  It is telling and has to give each one of us pause that markets are so unhinged that they react to the frivolous act of doing nothing.  It seems to indicate that we are in a stratosphere of thin air awaiting a minor episode which will put markets into a tailspin when we least expect it.  US markets are recovering from what looked like an initial opening plunge and are sporting minor losses, reflecting the fact that most corporate profit reports overnight beat expectations.  Oil and precious metals are benefitting from the turmoil, both up on the day.  International markets took the brunt of the decline, with Japan's Nikkei down 3.6%.  Other Asia markets and Europe are trying to recover from the initial plunge and, like the US, are rapidly looking at the Japan episode in the rear view mirror.  The star of earnings season thus far has to be Facebook, which saw profits triple.  That stock is up 11% in early trading.  This stock market has been incredibly resilient in light of potential negatively negative news but investors are becoming more skeptical that it can hold these levels.

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