Market Recap for August 1, 2019
Today's article will be very brief.
The whole Fed deal and now another trade tweet. Really? Can we all just get along? It reminds me of that old Jackson 5 song, Rockin Robin (sing along if you'd like....and yes this is showing my age):
"All the little traders on Wall Street
Hate to hear the Prez go tweet, tweet, tweet"
I have no intention of getting into a political discussion as my research tells me that from a stock market perspective, Wall Street doesn't care whether a Democrat or a Republican is in the White House. Over the last 100 hundred years, S&P 500 performance shows little preference.
If there's one thing that I've learned over the years, it's that Wall Street absolutely loathes uncertainty. The Fed gave no clue as to what their next move will be, although I almost guarantee it will be another rate cut. Now we've got more threatening trade tweets with China considering "countermeasures". Wall Street doesn't want to hear either the Fed or the tweets, but it's reality.
That reality sank in the past two days and reminds us that this bumpy ride that we've experienced in 2018 and 2019 isn't going away. I firmly believe we go higher in time, but how we get there is a mystery. On Wednesday, it was the Fed's lack of transparency (the opposite of what Bernanke and Yellen built over a decade or more) that scared traders. Yesterday, the market was humming along and then we got another "tweet on the Street". Ugh....
The bond market took the time to send a BIG message right back at the Fed. Here it is in the form of a chart:
At this morning's low, the 10 year treasury yield ($TNX) had fallen nearly 20 basis points since Wednesday afternoon's FOMC policy statement. Are you a StockCharts.com member, Mr. Powell? No? Maybe you should be.
There was also a big flight to safety yesterday with defensive sectors leading, while aggressive sectors lagged.
I'll be back on Monday with my regular article. Wishing everyone a great weekend!
Happy trading!
Tom
