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This past week the FTSE 100 aggregate companies regained £62 billion of the £112 billion in valuation that they lost during the prior week. The index finished the week at 6,545.27, a gain of 3.9% on the week.
Oops! Pardon me. That introduction kind of took the polish off the headline, didn’t it? Oh well, I might as well tell the whole truth, rather than just some of it. No need to send people into an unjustified celebratory mode. Still, on its own merits, the increase (percentage-wise) should provide a more pleasant weekend for investors heading into the final trading days before Christmas and New Years.
The situation this week, and the recovery from the disastrous week that preceded it, reminded me of a lesson I learned back in the early 1980s. It wasn’t on the financial page. It was on the sports page. I was living in Toronto at the time and I was an avid fan of the Toronto Blue Jays, the relatively new American League baseball team. (I apologize for using a baseball illustration, but I know nothing about cricket, other than it is much like 5th Grade was for me: long and boring.)
Closing in on yet another losing season, as new teams are wont to do, a reporter, trying to look on the positive side, asked then-manager, Bobby Cox, what he thought about the fact that the Blue Jays were leading the league in double plays (getting two opposing base runners out on one play). Cox took the shine off the apple when he responded that “It means that we are letting to make runners get on base in the first place.”
So, although it was a week to appreciate, let us not forget to keep the bigger picture in focus. The global economy is still fragile – not to mention the political scene. Right now, when someone in the Middle East sneezes, people in countries halfway around the globe are running for tissues, whilst others are saying “Gesundheit.”
Janet Yellen’s address on Wednesday seemed to pour some oil on troubled waters. Once again, I apologize. I couldn’t think of another cliche that didn’t use oil. But then, oil does have a lot to do with the current uncertainty and volatility. The Federal Reserve’s all-too-often subtlety, expressed this week as being “patient” about interest rate increases, seemed to assuage fears and boost confidence as investors look forward toward the next several months.
Just in case you think that what Ms. Yellen has to say, and the way that she says it, have no impact, The Dow enjoyed its best single day in three years on Thursday. Conincidence? I don’t think so. The S&P 500 had its biggest two-day increase in three years as well. The NASDAQ was also up on Friday, as were the Nikkei and the Hang Seng. It kind of makes you wonder.
Bottom line: the blue chips have had a blue chip week. Hang on for the ride. Santa is coming this week. Who knows what gifts he will bring?
