Investment Insights

Latest Investment Insight - 04/11/14

A Macro View – Trouble

Trouble, trouble, toil and trouble. So it wasn’t quite as dire as Macbeth but it was indeed a troubling week for equities. Thursday’s rout of the Nasdaq index, and the concomitant slide in biotech and technology names, was especially severe, with the overall market posting one of its...


New Federal Reserve head Janet Yellen is already taking back her comments at her first Fed meeting. The Fed indicated they would continue the taper program to its conclusion, which would be November/December of this year. Interest rates would then rise about six months later. The unemployment rate by then would be at or below the magic 6.5% number. The stock market did not react very positively to those comments as it meant the markets favorite elixir was being removed.


The economic backdrop in the first quarter was muddled, with extraordinarily severe winter weather throughout much of the country adversely impacting economic reports into March. Early in the quarter the uninspiring data, combined with concerns about emerging economies, was enough to prompt a sell‐off in the stock market. Investor angst was already elevated due to the Federal Reserve’s (“Fed”) decision in the previous quarter to begin tapering its asset purchases.


Facebook (FB) recently offered $19 billion to acquire WhatsApp, a five year old company with 55 employees. Analysts have come down on both sides as to the value of this company. The Wall Street Journal noted that ConAgra, a company with 26,000 employees, can only claim a $12.27 billion market cap. A $19 billion transaction will create a huge amount of tax revenue for the federal and state (CA) governments.