Daily Market Update – July 17, 2014 (Close)

The one thing that is probably not factored into many people’s equation for market direction is the completely unexpected.

Today, with the likely downing of a passenger aircraft over the Ukraine – Russian border, the unexpected happened and you saw some predictable responses in stocks, bonds and precious metals, although the responses weren’t really that large in relative terms.

Wherever the truth may be, the initial responses will have to wait, perhaps only overnight, to know whether they were valid and warranted a stock sell-off.

So tomorrow may be interesting, as news also comes of Israle’s announcement that there would be an expansion of operations against Hamas.

By comparison, yesterday’s big news seems so quaint, as the banks took a quick break from earnings reports, until this morning’s positive report from Morgan Stanley. That news centered around Rupert Murdoch threatening/offering/seeking to buy Time Warner.

The analysis of the situation seems to point out that doing the right thing may have bad consequences for some.

In this case it was a question of relatively new Time Warner CEO Jeff Bewkes doing the right thing by spinning off or selling non-core assets changing the company from a media conglomerate to a pure entertainment business.

That’s what may have made it more appealing for someone like Rupert Murdoch during an era when the likes of Comcast and Verizon are getting bigger and bigger. It becomes a battle of survival between the owners of the content and those that get the content to consumers willing to pay ever large increasing amounts for content.

In the short term mergers and acquisitions fuel the market, but they are also cause for some concern, as someone so wisely posted yesterday, looking back at some of Murdoch’s previous high profile buy-outs.

At what may be a $100 billion dollar deal this one is certainly a high profile deal and is definitely reminiscent of the timing of the ill-fated Time-AOL deal.

In the meantime after some decent gains yesterday the European markets were again weak, as they were last week following concern ov
er a Portuguese bank.

This time there’s not much identifiable to account for the weakness, but it’s looked to work its way to our shores as the pre-open trading, while improving from its early lows, was on track to erase yesterday’s gains.

Once the bell rang it was clear that today wasn’t going to be a day for more records. What wasn’t clear was the tragic surprise in store for everyone.

With next week’s options becoming available for those with weekly options but not expanded weekly options, some additional rollover opportunities began with today’s trading and hopefully some will still open up before tomorrow’s close, in an effort to make something worthwhile this week. The late day sell off today

While last week was exceptionally busy without having added too many new positions, so far this week is a polar opposite, with scant trades in any category. While there are still positions where rollovers or assignments can still potentially occur it would  have been nice to have a continuation of yesterday’s market and some continued upside to make the potential become a reality.

Even though it’s difficult to keep up with a market that moves more than 1% higher in any given week, sometimes those moves are necessary to be able to execute the kind of trades to keep the cash flowing. What isn’t necessary is a sudden and unforeseen reversal of good fortunes.

Lately the market, while not setting the world on fire, even while still setting new record highs, has continued to be incredibly resilient to any challenges, so overseas weakness and Murdoch’s profligacy may simply be momentary speed bumps. It’s the unknown, though, that can be a far bigger hurdle.

 

 

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