Hey everyone! What a market we’re seeing in 2019! And I suspect the second half of this year will offer up more unexpected surprises. As our User Group continues to grow I enjoy working with all our members to use as many of the tools as the markets gives to us to exploit price action. We’re having a another great year and I want to thank all of our members. For those interested in joining our User Group I would encourage you to take advantage of some of our weekly offers. Not only will you learn more about the markets than you expect, you will also learn how to profit from your knowledge; -which at the end of the day, is what really counts. I hope to see you on the inside!
Weekly Sound Bites;
• Our very own Fed Chair Jerome “Power Ranger Boom-Boom” Powell spiked the market’s punch bowl this past week which put even more upside juice into price action. After his Congressional testimony this past week the market party continues to reach new all-time highs with the DOW topping 27,000 and the S&P taking out the 3000 levels. Lower rates are all but an assured probability according to the Fed Fund Futures markets with a 100% assurance of a 25 bps rate cut at the next Fed meeting coming up in a few weeks and over a 72% probability of another 25 bps rate cut at their Sept 17-18th meeting and a 55% probability of a final rate cut at their Dec 10-11th meeting…really amazing to me we are seeing these rate cuts built into current market price action….and from my experience, if we don’t see the FEDs come thru as forecasted, we can expect downside price action…lower interest rates will continue to build asset bubbles in the markets as money goes in search of yield.
• Human greed creates the FOMO (Fear of Missing Out) upside price action where it can take on an aggressive upside stance before a more rationalized approach takes place and slaps markets down…we only need look back to 1998 when Alan Greenspan coined the term “Irrational Exuberance” while cutting interest rates during a strong 90s Bullish Run – and the markets continued to party on; well at least for a few years more until the bubble burst in 2000…and this bubble will eventually burst here as well, but we could still see much more upside before finally giving it all up…to quote a mobster in “The Godfather”; Hyman Roth said, “this is the business we’ve chosen, and it’s up to the investors to deal with the rigged game, whether they like it or not”…so we continue to play long moves while the markets gives it to us…
• We’ve seen GDP growth in the first half of 2019 come in around 2.3% with expectations of it slowing a bit to around 2.1% to finish out the year…And this will be one of the first times where we see the FEDs actually cut rates while markets are making new all-time highs…this is the reason we can expect more FOMO action for the intermediate term…longer term the markets will find itself running out of steam and moving into a more serious downside direction eventually turning into a Bear market….but for the short term price action is destined for more upside action with some smaller pullbacks along the way…current self-induced artificial lower interest rate environments will force large money funds to seek higher yielding and more risky assets which in turn drives prices higher compounding the moves even higher…eventually market fundamentals will outweigh lower rates and the real fun begins as markets begin to self-correct…
• Q2 Earnings kick off this coming week with 56 companies reporting their results…it will be a very strong week for Banks with JPM, WFC, GS, PNC, USB, COF, MS and C…it will also be a very active week for Economic Data as we’ll see June Retails Sales, Residential Construction Consumer Sentiment and Regional Manufacturing Data from New York and Philadelphia…after companies posted a YoY EPS growth of 0.8% for Q1, the consensus estimate for Q2 is for a 2.7% drop in EPS….should Earnings come in very poorly we can watch price action to see if the FEDs Put on the markets is worth more than poor earnings…at least for now the markets are telling us it likes the FED Put, which is their willingness to stay very accommodative with lower interest rates, which keeps asset prices elevated…
Enjoy our Weekly Round-Up:
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