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Growth is the only reliable panacea

Published Tuesday, April 8th, 2014

Non-farm payroll data that met expectations should have ensured a positive start to the week. It did not and as always the search is on for a hindsight explanation. Already priced in, not quite good enough, merely a modest catch up after a poor 1Q, good enough for the Fed to continue tapering but not good enough to confirm that real and sustainable growth has taken over or come to mind.

An alternative explanation is that the figures coincided with a sudden loss of faith in technology and bio-tech stocks ie so called growth stocks. The Nasdaq was already wobbling and continued to do so yesterday losing 1.2% for a total loss of 4.6% over the last three trading days. Twitter has become a bear stock with a loss of over 20%.

Finally there is the possibility that with an okish NFP data set out of the way, it is time to prepare for 1Q earnings results which are not expected to surprise to the upside. Yesterday’s activity suggests that markets are fearful that if results reveal that profit growth momentum has stalled and forward guidance is cautious there could be a big sell-off. Alcoa kicks off the US 1Q earnings season tonight.

To read the rest of the report, please click here 

Posted by David Hufton