It’s Groundhog Day, and for those checking their shadows for clues why 2014 has been such a wintry year to make money in stocks, here are a few possible omens far from the fields of Pennsylvania:
■ Too much talk. When the president of the United States touts soaring stock prices in his State of the Union address, it’s a bell-ringer if there ever was one.
■ The Amazon effect. It’s not quite as ominous as when General Electric missed its numbers in the spring of 2008, which presaged the financial crisis. But when one of the market’s most-beloved stocks disappoints, buyers beware. The fact that Amazon and its charismatic founder, Jeff Bezos, were the subject of a glowing “60 Minutes” profile late last year only adds to the broader significance of Friday’s 11 percent plunge for the stock.
■ Deflationary fears. For all the talk of interest rates in the US going up in 2014, they have actually been marching down of late, hitting three-month lows last week. It could represent a flight to quality, but it might also represent increasing concerns about deflation. Meanwhile, emerging markets are tightening their monetary policies to try to protect their currencies. Fears of a deflationary shock are shaping up to be the surprise of 2014.
■ The Fed factor. Yes, the Fed is tapering in the post-Bernanke era, but that’s been widely telegraphed for months now. The advent of a new Fed chairperson (Janet Yellen), however, is not market-friendly. As David Rosenberg of Gluskin Sheff notes in his most recent letter to clients: Three months after a new chairperson is on the job, the market is down on average by about 3 percent.
■ Freaky Fridays and bad closes. Both were the hallmark of January trading. Typically, bad closes and down Fridays are bellwethers for more selling and volatility.
Those are just a few reasons that February will be an interesting month for investors. They may provide a few more clues to the market than Punxsutawney Phil has to offer on the weather.