Time For A Pause Perhaps

On this morning’s Trey Ware Show, Karl discussed the recent moves in the stock market and what’s really driving the recent volatility.


Trey Ware:                         every Monday at this time, Karl Eggerss from EggerssCapital.com comes in to talk about what’s going on with the market and our money. Is today a holiday, the Veteran’s Day deal, Karl?

Karl Eggerss:                      Kind of. It’s one of those confusing days. The bond market is closed, but the stock market is open.

Trey Ware:                         Okay, so there will be trading today?

Karl Eggerss:                      Yes, there will be.

Trey Ware:                         Okay, so how are things going?

Karl Eggerss:                      You know, we’ve got a … I commented on my podcast this week, and we have a bad combination short term, temporarily, and what that combination is is the economy starting to decelerate, so picture, Trey, that you’re driving your car 55 miles per hour, you let your foot off the gas, what happens? You start to slow to 50, to 45, that doesn’t mean you’re going to go backwards, that doesn’t mean you’re even going to stop, that just means you’re decelerating. We’re going through one of those, which we’ve had probably four or five times since the financial crisis, so it’s not huge, but at the same time, the federal reserve keeps raising interest rates, so we’ve got that combination. So if this is just temporary, we start to get a re-acceleration at the beginning of next year, everything’s fine. And/or, okay, we’re going to raise rates in December, and then we’re going to pause. And if they say that, then back up we head. And not only that, but obviously if we can get this trade war with China making some progress. So those two things are kind of keeping a lid on the market temporarily, so we’re getting some volatility, we obviously saw a bounce back in the last couple of weeks, but right now, we’re at a point where I think it’s going to pause a little bit.

Trey Ware:                         Do we know what’s causing the deceleration with the economy right now?

Karl Eggerss:                      Actually, it’s because it was just going so fast.

Trey Ware:                         Yeah.

Karl Eggerss:                      I mean, it really was growing so fast. You had … corporate profits have gone up 25 to 30% this year compared to last year. I mean, you had some really fast growing things happening. Unemployment is scraping the floor, almost everybody that wants a job has a job. So it’s a matter of, okay, it’s just going to be a little less than that. You just can’t keep growing at that type of pace. So again, it’s not … to me, it’s nothing earth shattering. We go through cyclicality all the time. I do not see a recession, I want to be clear about that, I don’t see a recession, I just see a slow down. There’s a very big difference between those things. And the slow down I’m talking about is short term, not long term.

Trey Ware:                         Okay. All right, so what do we expect to have happen today? What’s going on with oil prices and things of that nature? I know I’ve heard a lot about OPEC, and it looks like they’re going to do a cut, so tell me where we’re headed with that.

Karl Eggerss:                      Well, we have kind of an official bear market now in oil, oil is down somewhere between 20 to 21%, literally just in the past few weeks. In fact, it’s down … up until today, it was down 10 straight days, that’s never happened before. So now we see these cuts coming, so oil is going to bounce a little bit today, it’s up about 1% this morning, but on the flip side, we do have equities a little weaker, the Dow is projected to open down about 90 to 100. So again, this is an important point for the investors that are listening. Know what you own because different things in your portfolio do differently at various parts in the cycle, right? In other words, things where the economy is starting to take off do very well. There are certain things that do well when the economy is decelerating, so just know what you own. This is not a bear market, this isn’t anything like that, it is a market that is maturing, it’s an older market, so because of that, you have to know what you own in your portfolio.

Trey Ware:                         All right. Sounds good. Karl Eggerss, EggerssCapital.com. As always, on Mondays at this time.  Thank you, Karl, I appreciate your time again this morning.

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