[widget id=”text-23″]
The Excuse For Today’s Sell-Off Trade Wars! Fuhgedaboudit!
Unlock Deeper Insights with Exclusive Member-Only Video Content on The Market Chronicles YouTube Channel – Just $34.99/Month
Job Report Impacts
NFP Live Zoom Replay 10.4.24
Jobs Report Preview
Happy days are here again! First, it was rising inflation and rising yield fears; now it is the looming trade wars. The whole things with the tariffs aren’t new news; in fact, it is old news. So why is now the time for the market to go into freakout mode? I dunno, it never seemed to care before. But the tariffs seems more like posturing and a political game of chess. In fact, there are reports tonight that the US is holding talks with China on fair trade.
[widget id=”text-16″]
Let Michael help you! Have questions? Let Michael help you find the answer. Sign-up and get two weeks free: Watch the latest video: Breaking Down Acadia’s Results, Exploring Trends In Chips Stocks
[widget id=”text-19″]
Fragile
All of this volatility the past few weeks tells us just how fragile the stock market is, and that maybe the critical take away here. Who knows what could rattle the markets next?
[widget id=”text-22″]
Rate Hikes
The thought of 4 rate hike from William Dudley, the NY Fed governor, mentioned today surely didn’t help either. But the Fed isn’t going to raise rate 4 times in 2018; it ain’t gonna happen.
[widget id=”wordads_sidebar_widget-41″]
Inflation Watch
The trimmed mean PCE inflation rate was up 1.69 percent y/y at the end of January. Sound inflationary? It is not. The effective fund’s rates today stands at roughly 1.4 percent, think about what four rate hikes would mean? Think about where 3 rates hikes would be? You would have an effective funds rates at 2.15 percent to 2.4 percent, for a trimmed mean PCE rating of 1.69 percent? It seems excessive, especially since years of low rates and trillions in QE hasn’t stoked inflation.
A 2.4 percent effective funds rate, would push the yield curve to near inversion, if not invert it. The bond market speaks loud, 10-year yields have backed off their highs and fell to 2.8 percent today, the dollar weakened, failing at significant resistance.
[widget id=”text-22″]
Global Market
The problem is that we live in a global market, and the US is no longer an island unto itself. The ECB and BOJ at this point would love nothing more but the Fed to keep raising rates, with hopes of the dollar strengthening, and the euro and yen weakening.
As long as the European and Japanese yields stay low, our rates will be desirable to bond buyers abroad. That will cause buyers from overseas to buy our bonds, and keep a lid on the long-end of the curve from rising too much.
The Fed can raise rates as much as they want but they are fighting a losing battle as long the ECB and BOJ keep NIRP in play.
[widget id=”text-21″]
[widget id=”wordads_sidebar_widget-41″]
Mott Capital’s Reading The Markets – An In-depth Global Macro Stock Market Commentary – In Video Format – See How Michael Dissects The Markets
Just $200 Per Year – Get Your Free 2 Week Trial
Recent Videos:
Breaking Down Acadia’s Results, Exploring Trends In Chips Stocks
Stocks In Rally Mode, More To Come
Crazy Market Reaction Following Fed Minutes, Plus Subscriber Mail Bag
Subscriber Mailbag, Plus Market Rundown
Free Articles Written By Mike:
Roku Short Sellers Are Piling In Even As Stock Falls
Nvidia’s Stock May Be A Bargain As Earnings Forecasts Explode
Micron Traders Place Big Bets on 19% Stock Gain
6 Bargain Stocks Hidden in Market’s Rebound
Gilead’s Stock Rebound May Stall As Analysts Cut Forecasts
Netflix Seen Rising 40% On International Growth
Why Chip Stocks Will Keep Rising
Exact Sciences’ Nightmare May Get Worse for Investors
Why Tesla’s Stock Can Soar to New Highs
Join our 2,666 Daily Subscribers And Get This Commentary In Your E-Mail! Subscribe
-OR-
[vc_tweetmeme type=”follow” follow_user=”michaelmottcm” show_followers_count=”true” large_button=”true”]
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future.
© 2018 Mott Capital Management, LLC. Use, publication or reproduction in any media prohibited without the permission of the copyright holder.
Tags: #sp500 #inflation #yields