Market Update: Dow Jones Today Fights Back as IMF Sees Increased Risks to World Economy

Market update: The Dow Jones Industrial Average fought back to a small gain in early afternoon trading after the IMF updated G-20 officials on the world economy and markets.

Feb 19, 2014 at 1:30PM

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The Dow Jones Industrial Average (DJINDICES:^DJI) fought back into positive territory in early afternoon trading, rising five points, to 16,135, as of 1:30 p.m. EST after housing starts in January came in well below analyst expectations and the International Monetary Fund updated Group of 20 finance officials on the risks seen for the world economy.The S&P 500 (SNPINDEX:^GSPC) was down less than one point to 1,839.

G-20 finance officials received the IMF note at about noon today; it comes ahead of the Feb. 22-23 meeting in Sydney, Australia, of finance ministers and central bankers from the G-20 nations. The IMF had previously forecast world economic growth of 3.7%, up from 3% in 2013, but said the recovery remains weak and is threatened by recent currency volatility in emerging markets.

The report highlights, "Capital outflows, higher interest rates, and sharp currency depreciation in emerging economies remain a key concern." It adds: "A new risk stems from very low inflation in the euro area, where long-term inflation expectations might drift down, raising deflation risks in the event of a serious adverse shock to activity."

Inflation has remained well below central bank targets in both the U.S. and the European Union. However, it has been picking up somewhat in Japan, which is fighting 20 years of sustained deflation. The IMF said it believes the U.S. Federal Reserve needs to better cooperate with foreign financial officials, as its economic stimulus pullback announcements have led to an exodus of funds from emerging markets, hitting those who are funded by debt hardest. The report says, "Strengthened and cooperative policies would deliver stronger, more balanced, and sustainable medium-term growth while reducing risks of renewed global turmoil."

Before the report was released there were two U.S. economic releases that weighed on investor optimism.





Producer Price Index (PPI)




Core PPI




Housing Starts



1.05 million

Building permits




The one to pay attention is the housing starts report for January, which came in at a seasonally adjusted annual rate of 880,000, well below analyst expectations of 945,000 and 16% below December's upwardly revised level of 1.05 million. This finding follows a string of poor reports on the economy, and the housing market in particular, most of which have been blamed on the terrible winter seen in U.S.

While the economy looks like it is slowing down in the short term, the larger story is still unchanged. The stock market is overvalued, and earnings look cyclically high. That said, predicting where the broad market will go in the short term is a game for fools (with a lowercase "F"). Stocks can always get more overvalued. When things get frothy, it's worthwhile to build up some cash on the side for when prices inevitably fall.

The Motley Fool has always taught that Foolish (capital "F") investors don't invest in the broad market. We invest in great companies at good prices, continue to educate ourselves, and hold on to our great companies over the long term. The market will fluctuate (sometimes massively), but great companies will win out over the long run.

As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

Dan Dzombak can be found on Twitter @DanDzombak or on his Facebook page, DanDzombak. He has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information