Hey Folks, we are winding down our summer months (it really goes fast) its traditionally a slow time for markets. In Fact, the month of August has historically been one of the worst weeks for the S&P performance. We are clearly starting off that way! Enjoy this week’s update….
• The markets had a very interesting trading week with a negative reaction to Jerome Power Ranger Boom-Boom Powel’s 25 bps rate cut / press conference confusion to the plow back and only to plunge again to Trump’s Tweet on imposing an additional 10% Trade Tariffs on the remaining 350B in Chinese Imports…this resulting in the S&P and the NASDAQ turning in their worse weekly performance this year…
• Perhaps it is timing, but in previous market peaks, it seems Trump’s Tweets on imposing more tariffs on China brings the markets back down again…from Jan 2018 peak, the Sept 2018 Peak, and even in May 2019, all of these S&P 500 Peaks were met by Trump Tweets that undid price action performance driving the markets lower…and then of course let’s include we were near another Market peak this past week and off goes another Trump missive! Or maybe he is really a trader at heart and he’s playing the markets like a pro! Who knows, but it does cause all the rest of us to really be cautious as markets move higher…
• US Interest Rates moved lower on the FED 25 bps rate cut, but the Trump Tweet moved the rates lower more aggressively…we saw the biggest 1-Week decline in Interest Rates in the 10 Yr. Rate in the past 7 years falling more than 21.7 bps…current yield on the 10 Yr. interest rates are sitting close to the lows around the week Trump was elected President in Nov 2016…and finally, with this past week’s action we are now seeing almost a 100% probability of another 25 bps rate cut at the FEDs Sept on 17-18…and to round out the year another 25 bps probability at 75% for their meeting in December; –in other words market expectations have increased for 2 more cuts for this year!
• But one need only look around the Planet for Gov Debt to see just how low, or negative those rates can move…with over $13 Trillion in negative yielding debt, (Europe just moved ahead of Japan for holding the most) we are seeing Globally all Central Banks race to the bottom with the lowest rates….this, in turn has driven more money to US markets pushing our Gov Bonds higher and our interest rates even lower; –but still one of the best on the Planet!
• Trade date this past week showed imports from China dropped over 12.6% in June YoY yet we’re seeing an increase in imports for other countries (S. Korea, Taiwan and Vietnam) over 9.2% YoY as larger corporations are adjusting and moving their supply chains to other countries…And also in the Economic front we saw the monthly Jobs data come in at expectations which shows the US markets domestic consumer strength and underlying support for the US Stock markets…
Don’t Be A Rat Brain Trader – Be the Red Striped Zebra !!
Trade Smart !