The Big Yawn: Investors Huddle on Sidelines Ahead of Brexit Vote

And the holding pattern continues. Investors appeared to huddle on the sidelines in the early going today, a day ahead of the only issue that the markets seem to be fixated on: Britain’s vote on whether to stay in the European Union.

Pollsters and pundits in the United Kingdom continue to cast the outcome in a precarious state, meaning it won’t be over until it’s over. Brits vote tomorrow but we won’t see any real results until about 2 a.m. ET Friday, which is 7 a.m. in Britain. Meanwhile, the markets look to continue a slow, low-volume move higher on bets that the do-I-stay-or-do-I-go results will be to stand pat.

Yesterday, Janet Yellen spoke and the markets…did nothing. In her twice-a-year chitchat with the Senate Banking Commission about monetary policy, the Federal Reserve chair repeated what she has said in the last two weeks in a speech and at the Federal Open Markets Committee meeting, though with a slightly more cautious undertone: Economic growth is weak, productivity is “disappointing,” there are headwinds in the U.S. and abroad that the Fed must wait out, and rates will be held steady in the near-term, and maybe, even in the long-term.

“Although I am optimistic about the longer-run prospects for the U.S. economy,” she said, “we cannot rule out the possibility expressed by some prominent economists that the slow productivity growth seen in recent years will continue in the future.” Will she repeat all that again today to the House Financial Services Committee?

Noting that the Brexit vote on Thursday will be “significant for United Kingdom and Europe,” she and the Fed are not taking a stand on this “unique event.”

By the close, all major indexes had managed to hold on to small gains, providing a second straight day of upside trading though it wasn’t monumental. The Dow Jones Industrials (DJIA) added 24.86 points to finish at 17,829.73 while the closely watched S&P 500 (SPX) edged up 5.65 points to settle at 2,088.90. Energy and telecom sectors led the way while materials lagged. The Nasdaq Composite Index (COMP6) got a little oomph too, higher by 6.55 points to close the session at 4,843.

Crude oil prices are tipping past $50 a barrel in early electronic trading today after the American Petroleum Institute reported that crude-oil supplies tanked by 5.2 million barrels for the week ended June 17, according to published reports. That is well deeper than the 1.4 million barrels analysts were projecting. Yesterday, West Texas Intermediate (CLN6) ended the session at $48.85 but was trading at $50.25 at last glance.

Yellen Fires Warning Shot. Federal Reserve Chair Janet Yellen is worried about valuation levels in the stock market. Much of that is because of the low-interest environment, which prompts investors to look for better yields in the markets, she intimated. While chatting with the Senate Banking Committee about U.S. monetary policy Tuesday, she said this: “In equity markets, valuation pressures have increased somewhat as expectations for corporate earnings have been revised downward.” The annual monetary policy, released ahead of her testimony on the Hill, noted that “forward price-to-earnings ratios for equities have increased to a level well above their median of the past three decades.” And then she added this about asset bubbles: “I don’t see signs of extreme threats to financial stability at this time…but it is something that can happen in a low-interest environment.” The translation: Stock prices are historically high and could fall because of drops in corporate earnings, and, yes, there are bubbles forming but nothing to worry about. Just yet.

Another No Confidence Vote. We’re fretting more about the economy again, according to Gallup’s U.S. Economic Confidence Index. The score dipped to the minus-15 level for the week ending June 19 as our views about the economy’s momentum turned darker. The week before, the index stood at minus-12. That puts the economic index back to where it was in early April, and worse than the average minus-12 for the year so far, Gallup says. What soured? Our confidence in the economic outlook, one of two components Gallup averages to reach the index score. The economic outlook rating plunged to minus-23 from minus-18 the week before, while views on the current economic condition slipped to minus-6 from minus-5. We’re on track for a more dismal outlook on the economy this year than we were in 2015, and certainly than we were a year ago when plummeting gas prices buoyed our confidence and those two measures were minus-2 on conditions and minus-9 on outlook, Gallup says.

All in the Family. Tesla Motors Inc (NASDAQ: TSLA) Chair Elon Musk wants to bring SolarCity Corp. (NASDAQ: SCTY) under its roof in a $2.8 billion deal that Musk, the largest shareholder of both companies, will not vote on, he said Tuesday. Nor will SolarCity’s Chief Executive Lyndon Rive, Musk’s cousin. (Their mothers are twins, according to the Wall Street Journal.) The deal offers a premium on the SCTY shares of 25% to 35% over Tuesday’s closing price, according to the WSJ. “This is something that we have been thinking about and debated for many years,” WSJ reported that Musk said in a conference call with reporters. “But the timing seemed to be right now” as Tesla ramps up battery production used with solar panels, SolarCity’s main business, he said. The Financial Times called the proposal a “bailout between two Elon Musk companies that shareholders will vote down.” Ahead of the market open Wednesday, TSLA shares were slumping by 11% while SCTY shares surged 15%.

© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.