State of the Stock Market for the Week Ending April 5, 2014 (Stock Market 4-5-14)

State of the Stock Market April 5th 2014

Stocks slipped on Friday, regardless of the “so-so” employment report that showed 192,000 new jobs created. That number fell short of the 200,000 jobs economists were expecting, and it drew the wind out of the stock market’s sails. Jobs growth has been a major concern for investors, and having yet another month of sub-par growth was disappointing to say the least.

It was not all that bad of a week, though, as we saw the S&P 500 actually gain 0.4%. The Dow even managed to gain 0.5% although the Nasdaq did fall by 0.7%. The Nasdaq fall was interesting in that it was fueled by some big losses in some of the high-profile, big cap names. That is not a healthy sign for any market that has been red-hot for the past few years.

Many market analysts are growing cautious on the sudden flurry of IPOs that Wall Street is rolling out at a fever pitch. Candy Crush, or King Digital Media (KING) as the company is called, is a sign that the Wall Street game of the 1999-2000 era is back in play. How that happened is anybody’s guess, but someone or something is wanting a red-hot stock market again. And it is happening right now.

Forget about job growth, GDP growth or even earnings because as long as hot IPOs are taking off, Wall Street does not seem to care. The quality and strangeness of the recent hot IPOs are worrisome even for the most bullish bulls. Capital markets work, but we know how distorted they can become when markets get confused and unhinged. Some of the IPOs we are seeing suggest some “unhinging” from reality.

Five years of stimulus from a Federal Reserve that has also been “unhinged” does not help matters. The “Full Court Press” it has made toward pumping up the economy could have grave effects (had to have a Final Four reference!). Whether it is ultimately inflation, recession, or a new depression, we do not know. The stimulus is there, though, and we will have to see how it eventually unfolds.

Stocks are still near all-time highs, though, which has few bulls complaining. There is a growing sense of nervousness on Wall Street, and oddly enough, that is bullish. We are in a new month, and as long as strategists are acting more bearish than bullish, then things should continue to be fine. That said, the Gorilla wishes each and all a wonderful Spring weekend. Happy April, and best of luck to each of the Final Four Team!


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