Hey everyone, hope you are enjoying the weekend. As I review the markets for this past week and for the year actually we have a number of very interesting incongruencies taking place. Eventually, as we all know, markets over time will find its fundamental “best value” but on a day to day and perhaps a near term basis, price action can act like an emotional voting machine. So let’s see how things work out as the votes are tallied!
This Week’s Sound Bites:
• Major stock indexes rose for the 10th week of the past 12 bring the S&P to its highest close since early Oct before the Q4 crush…We are seeing incongruencies in the debt markets as it relates to equities…typically when equities move higher we see Bonds move lower and rates move higher, yet most bond like sectors are actually outperforming other equity sectors over the past full year…the SPY is up about 4% and XLU is up over 20.3% during this 12 month timeframe…in today’s markets we’re seeing the Pain Trade is Higher, not Lower and I am now hearing a new acronym of TOSO (Tired of Sitting Out) which then leads to FOMO (Fear of Missing Out)…
• Coming up next week on Wed we’ll peer into the minds of our Central Bank with Power Ranger “Boom Boom” Powell giving us their view of the US Economy and interest rate policies…no rate hike is expected (2.25% to 2.5%) however markets are most interested in what’s next? The Fed Funds Futures were pricing in about a 37% prob of a rate cut by next January…MMT believers want to hear from the FEDs and suggest more borrowing since the US borrows in its own currency and thus doing so will not impact inflation…
• China’s industrial output grew 5.3% in the first two months of 2019, the slowest pace of expansion in 17 years. Investments picked up pace, however, as the government fast-tracked more road and rail projects, while retail sales rose 8.2%.
• The final vote in the U.K. parliament this week saw lawmakers decide to delay Britain’s departure from the EU, sending Theresa May back to Brussels to request an extension.
Now, check out my update on the markets in this week’s Weekly Round-Up:
Don’t Be A Rat Brain Trader – Be the Red Striped Zebra