Hold on to Your Hats
As you know, volatility rarely builds slowly. It typically happens all at once. I went to bed last night and saw overnight trading indicating a lower open by 100 Dow points. When I woke up, that had shifted to up 100 Dow points. I showered, got dressed and ate breakfast. The Dow was then indicated to open lower by 300 points as global bond yields collapsed. Why do we care about this? Lower bond yields are mostly indicative of weakness […]
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Date: August 7, 2019
Here We Go Again
It’s been a tough three days for the bulls that is about to get worse as China retaliated for Trump’s tariffs with a series of their own. Their currency, the yuan, also fell below what analysts have deemed “critical” levels. It has long been argued that by weakening their currency, China has been able to partially offset the impact of the tariffs. I won’t get into another diatribe about how I detest and hate using tariffs as part of economic […]
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Date: August 5, 2019
Economic Reports Overshadowed by Trump & Powell
It’s been quite a week! Lost in the Fed and tariffs headlines has been three important economic reports that lead to a conclusion as clear as mud. The Chicago Purchasing Managers Index cratered to under 45, signaling trouble in the manufacturing sector. However, this number does have the importance it once did as the economy is only about 12% manufacturing these days. We also saw Consumer Confidence soar in July to just shy of an all-time high. That’s a little […]
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Date: August 2, 2019
Powell’s Arrogance & Ignorance to Continue – Here Comes the Cut
What to Expect Today Let’s get the worst kept secret out of the way. The FOMC is going to cut interest rates today by 1/4%. I don’t know of anyone who doesn’t believe that short-term rates are going down today, regardless of whether they agree or not. The big question is going to be what Powell says after that. Is this an “insurance” cut as in one and done? Or, is it the beginning of a rate cut cycle like […]
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Date: July 31, 2019
Big Week Ahead
Boy, it only took a single day of weakness, Thursday, for bulls to get right back to work. Friday made quick work of the bears and the bulls look like they are not quite done yet. Of course, the Fed will have a lot to say about that when they conclude their two day meeting on Wednesday with an almost certainty for fireworks. More on that in another update. The government released Q2 GDP and it can be interpreted two […]
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Date: July 28, 2019
Lots of Sideways Action – Could Lead to Another Leg Higher
With tech earnings season in peak mode, we are seeing huge moves in the prominent companies like Amazon, Google and Facebook, but overall, the indices have been relatively calm. The Dow and S&P 500 have been range bound and the longer this sideways action continues, the more likely the ultimate resolution will be to the upside. Bears have been pointing to the poor action in the S&P 400 and Russell 2000. The problem is that they have been behaving poorly […]
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Date: July 26, 2019
Lots of Ammo for the Bears
Lots of focus on technology this week as some of the behemoths report earnings. One thing is certain; there will be movement. All of the major stock market indices ended last week on the defensive as the bears put the plow down with a very heavy selling wave last Friday afternoon. That resulted in hundreds of stocks closing lower from all-time or recent highs which a yet another sign of a tired market. Coupled with overly confident options traders and […]
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Date: July 23, 2019
Opening Gaps the Theme – Financials Leading Banks
As earnings remain the theme over the next few weeks, large gaps on the up and downside at the open can be seen as the more impactful companies report after the close of the previous day. After Wednesday’s close tech giant Netflix delivered a very poor earnings report that looked to weigh very heavily on Thursdays open. However, by morning, those losses were somewhat mitigated and a only a mildly lower open should be seen. After Thursday afternoon’s tech slide, […]
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Date: July 18, 2019
Earnings Season is Here – Internals Fairly Strong
With earnings season beginning in earnest this week, the markets are now focused on two major items, earnings and the Fed. Weaker than expected earnings will give the Fed another excuse to cut rates at the end of July, not that they are really looking for more reasons to cut. With stocks at all-time highs, expectations are now very high for companies to deliver this month. Those that don’t will be severely punished. Sentiment has also become very bullish with […]
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Date: July 16, 2019
Trump 1 – Powell 0
Fed Chair Jay Powell finished his second day of testimony on Capitol Hill and his comments were unambiguous regarding a rate cut. It’s coming and it will not be a one and done. When pressed about the very strong employment landscape, he basically dismissed it and focused on everything his mandate doesn’t include, like weakness in Europe and trade tensions. I couldn’t find those listed in the Fed’s dual mandate of price stability and maximum employment. Um, ah, the economy […]
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Date: July 11, 2019
