Market Stresses and Strains Remain Unresolved

The markets today, Monday, appear ready to start down, with most major indicators in North America, Europe and Asia in the red at time of writing. (The picture can change before North American market opening at 9:30 a.m. EST.)

As the week begins, one perspective on market volatility would suggest that it’s a collection of strains. The Oracle/WalMart/TikTok deal relieves a strain that would otherwise have carried over into this week.

While it resolves one part of the U.S.-China tensions, it relieves a stress on Oracle while pointing up the importance of the cloud in the world as it is taking shape. Oracle gets to advance its cloud capabilities, in which it trails Amazon and Microsoft. The TikTok venture may not bring it up to equal footing with them but it will provide a needed boost. Oracle investors may react appreciatively.

The Federal Reserve’s assurance that interest rates will remain steady until 2023 is another strain relieved, (with disappointment over lack of new initiatives).

Still, other stresses and strains remain unresolved in the short term: the continuing antagonism between the United States and China, the COVID 19 pandemic, huge unemployment related to the pandemic, the likelihood that many jobs will not be replaced even with a recovery, the question of whether tech stocks can maintain their valuations and the seeming gap between the market and the real economy. And, of course, the Federal election is looming.

The solution? Regular reviews to ascertain the extent to which a portfolio is exposed.

Related: Several Factors Explain the Drag on the Markets