January 16, 2016


7 reasons not to be pessimistic about stocks today (JEFF REEVES, 1/15/16, mARKETWATCH)

Oil: Cheap energy prices are causing plenty of pain, from lost jobs across the industry to the threat of bankruptcy for overleveraged companies. However, the rough math on Wall Street is that every penny we see shaved off from gas prices equals an extra $1 billion in discretionary income for American consumers. Separately, a recent study showed that for every dollar consumers save at the pump, they spend an extra 73 cents elsewhere in their communities. Since consumer spending is the lifeblood of the U.S. economy, cheap oil has enough benefits in broad economic stimulus to outweigh the specific troubles of energy companies.

Insulation from China: I recently wrote a column on why China's crash isn't as bad as you think, and the most compelling reason is the relative insulation of the U.S. economy and stocks from the Chinese market. Citigroup estimates that only 0.7% of overall GDP has direct China exposure, and the very nature of China "A" shares limit foreign investors from deploying too much capital in that country. While China's slowdown matters, it matters much more to trading partners in emerging markets than the U.S.

Posted by at January 16, 2016 7:40 PM