“The last month or two we are seeing what feels like unprecedented volatility within our markets,” Jay Somaney writes for Forbes. “Apple hit a low of $92 per share on Monday and closed yesterday at $109.69. Using fully diluted share count of 5.77 billion (June 30, 2015 b/s), the company’s market cap went from a low of $530.8 billion at the low on Monday to $632.9 billion at the close of regular market trade last night. Change in market cap from the lows to yesterday close is 19.3% swing in 3 days. At the lows, Apple would have given back 14 months worth of gains.”
“We are looking at unprecedented amount (change in market capitalizations amounting to tens of billions in a mere three days) of needless volatility within global markets thanks to the misguided policies of our Federal Reserve, disparate and diametrically opposing statements from the various Fed heads, and the complete lack of acknowledgement that the world’s financial markets are tied primarily to our markets,” Somaney writes. “The U.S. is the dog that wags the global tail, no matter how much the various Federal Reserve members deny that fact or play it down, or in some cases ignore it altogether.”
“Like it or not, you just cannot have the central bank of the world’s most powerful country with the biggest economic influence in terms of GDP, consumption, income etc. decide to be a maverick on interest rates, especially when inflation (the main boogeyman) is nowhere in sight here at home. In addition, given the fact that the real employment rate is far lower than the one reported and [with] the absolute collapse in commodities ensuring that it will be a while before inflationary conditions will warrant a rate hike here at home, the rate hike mantra by our Fed just does not compute,” Somaney writes. “The one and only problem is the U.S. Federal Reserve’s crusade to prematurely raise rates and none other.”
Read more in the full article here.
MacDailyNews Take: Needless volatility can be very profitable.