Throughout the first few weeks of this year, there has been a lot of anxiety in the markets. This anxiety has been focused on emerging market worries, currency stability, China's banking and economic system, and the U.S.'s future path.
Frankly, I think all that is great and interesting. But, it really seems to me that if the U.S. continues to be stable and growing then all systems are a go for the stock market. If you've been reading my research reports, you know that my work shows that the key to future market gains is continued GDP growth. I believe "the market" knows this too. Every potential stumble regarding economic data pushes the market lower. However, from what I am seeing I do not see the U.S. economy collapsing. Rather, it looks darn good. And that makes this weakness in the market a potentially good buying opportunity.
Later today Fed Chairperson, Janet Yellen, will speak. And this morning she released her notes regarding what she will say. The gist of it is this...economic data looks solid, short-term rates will remain low, and tapering will continue at a measured pace.
What does that mean for the markets? As I said before, it sure looks like using this weakness as a buying opportunity could prove to be wise. Also, what happens when short-term rates are low but longer-term rates are rising in a slow and controlled fashion? Well, I'll keep all the specifics to myself...but certain sectors THRIVE in that environment. I'm focusing on mis-priced securities in those sectors.