Markets are no longer sanguine about the whipsawing of trade negotiations, inflation, interest rates, earnings, and the usual market movers. Fear of missing out, or FOMO, is at work. Just today, inflation numbers were hotter than expected a trade deal with China was announced, trade negotiations were halted with Canada, and we were reminded of the bombs dropped on Iran's nuclear facilities. Along with the hotter inflation numbers, the Labor Department this week confirmed that...
The head-spinning pace of daily events continues as markets react but mostly hold near record highs. We are once again seeing markets driven by the same seven large growth stocks that led in 2023 and 2024. While interest rates and inflation remain concerns, current inflation numbers largely exclude the impact of tariffs. Over the next two months, we’ll get a clearer picture of tariff effects. The budget reconciliation package now in the Senate is also...
Well, we have the TACO trade and the battle of the bros—ending of the bromance—making for another exciting week. Meanwhile, the S&P 500 crossed the 6000 level for the first time since February, though not without a fair amount of volatility. The TACO trade stands for Trump Always Chickens Out. It's a Wall Street meme referring to the pattern where Trump announces harsh tariffs that cause markets to sell off, only to later reverse, delay...
The only dependable piece of news is change. Last week, it was an announcement that Apple would face 25% tariffs on iPhones and the EU would face tariffs of 50%. The market reacted with a swift sell-off that moderated during the day but still resulted in losses for both the day and the week. When I wake up in the morning, I never know what news awaits. I thought we had a break in the...
When considering the role of uncertainty in negotiations, it can be helpful to visualize it as an upside-down "U." At first, uncertainty can be a strategic asset. It creates leverage for the lead negotiator, as the opposing party is unsure how to proceed and may tread cautiously to avoid triggering a negative response. However, as uncertainty drags on, its effectiveness diminishes. The negotiator's credibility begins to erode, and the opposing side often hardens its position...
Markets movements and data/news have a funny relationship. Different data points become the focus of market movements, and those data points change over time. This relationship between markets and data also contains the layer of "good news is bad news, bad news is good news, and bad news is bad news, and finally good news is good news. In each market cycle and sometimes each cycle, which of the four choices will prevail. After market...
Usually, volatility as a descriptor or roller coaster ride are used to describe declines in stock averages. Proving that declines happen faster than increases and the pain of losing value is twice as great as the satisfaction of gains. We are living in this world. After last week's huge declines including into the close of the market day indicate more to come. Every newspaper and publication had a headline similar to “what to do now...
Reality returns on Friday 3/28 as markets respond to tariff threats by Trump. The challenge is the high degree of uncertainty of what the Trump administration, in fact Trump himself will actually do. Reciprocal tariffs are set to start on April 2nd, but we have had repeated deadlines previously that Trump has changed at the last moment. The thinking by Wall Street is that tariffs were a negotiating tool, and deals would be worked out...
Another tumultuous week in the markets. The data continues an indication of slipping consumer confidence including an article in the WSJ indicating that wealthier Americans are cutting back on spending. WSJ - Slumping stocks It is still too early for the preliminary data to lead to more certain conclusions because the disruption of the new administration accompanied by chaos and court cases only has a history of 2 months. Today, the IRS is saying that...
Remember when markets were sanguine about the disruption and chaos in regard to the rapid introduction of the 2nd Trump era. The general rule is that markets function best with certainty. Disruption can create opportunity but chaos makes opportunity hard to find. The Wall Street Journal is mystified at the strategy with tariffs. The WSJ has repeatedly stated no one benefits from tariffs, especially when used against our closest trading partners. Especially after signing an...
This week the yield curve inverted again meaning the 10-year US Treasury yield is higher than the 3-month yield. Past history says this is one of the more reliable indicators of a recession in the next couple of years. This works except when it doesn’t. It did not work from 2023 through mid 2024 so although it has worked in the past, how concerned we should be depended on other factors. Today the understood popular...
Markets closed the week near new highs despite the volatility of the news that on first look might cause an investor to pause in the purchase of stocks because of concern about a sharp decline. Chaos and uncertainty generally cause large declines with the last bear market and recession caused by covid in 2020 although brief. Of course, as stated before, this could change in a day such as 11 days ago on a Monday...
