U.S. stocks after being deep in the red this morning, came roaring back this afternoon. Or at least technology shares did. The Standard and Poor’s 500, which had been as low as 2583 today, climbed back to close at 2637. The swing from high of the day to low was a huge 64 points. The index closed up 0.18% on the day. The big winners were anything tech that had positive momentum before the sell off of the past couple of weeks.read more
I dare you to find something global financial markets aren’t worried about. And, moreover, many of the worries are re-enforcing each other today. So, for example, we’ve got U.S. Trade Representative Robert E. Lighthizer, saying on Sunday TV the the 90 day trade truce is a hard deadline. No deals in 90 days and the Trump administration will move immediately to new tariffs, he implied.If you ended last week worried about a slowdown in global economic growth, then you began the week even more worried.read more
The Federal Reserve’s interest rate setting body, the Open Market Committee, meets on December 19 to 1) decide on a 25 basis point boost in benchmark interest rate, and 2) to tell financial markets what to expect on interest rate increases for 2019. It’s No. 2 that’s extremely important to the direction of stock and bond prices right now. The financial markets remain convinced that the Fed will raise interest rates on December 19. The thinking is that the U.S. central bank is just too committed to that action to change course now. But the market is convinced that policy for 2019 is in play.read more
This morning the November jobs report came in softer than expected–and that pretty much removed the last factor pushing the Federal Reserve toward aggressively raising interest rates in 2019. For November the economy added 155,000 jobs. That is still a strong number–and indicates that the real economy isn’t about to fall off a cliff whatever the financial markets might be signaling.read more
OPEC cuts production by more than expected–but markets are increasingly less impressed as the day advances
To the surprise of many, OPEC & Friends–what’s known as OPEC+–agreed to cut production by 1.2 million barrels a day beginning in 2019. This was a bigger cut than the 1 million barrels a day that commodity markets had expected. Oil prices and oil stocks initially soared on the news with U.S. benchmark West Texas Intermediate jumping to a session high of $54.22 a barrel and shares if U.S. producers such as Pioneer Natural Resources (PXD) ahead 2.46% in the early going. But as the day has gone along, oil markets have gotten over much of their earlier enthusiasm.read more
On a day like today–when U.S. stocks have resumed their downward plunge–the Standard & Poor’s 500 was off 1.91% as of 1:30 p.m. New York time and the Dow Jones Industrial Average was lower by 2.08%–it’s important to remember that the financial markets are not just reactive but proactive.
Yes, they do respond to news and worries about future news. So today we’ve got a renewal of fears about economic growth, new fears about a U.S.-China trade war after the arrest of the CFO of China’s Huawei by Canada and reports that she will be extradited to the United States, the crumbling of the U.K. government as a Brexit deal looks headed to defeat, and more. But markets–especially that part of the market dominated by computerized trading–are also proactive. They try to send messages that create the conditions for future profitable trades. I think the market is doing exactly that today. And I have to tip my cap–in the midst of my own portfolio pain–to the tactics now at work. Because this is one brilliant trade.