I
keep hearing that the reason the market isn’t rallying hard during this amazing
earnings season is that “it was all priced in”. Nothing new here. Everybody knew
earnings were going to be great, so now what?” Nah… I don’t buy it… If it were
all priced in so many companies’ stocks wouldn’t be screaming higher as
earnings are announced, only to give it all back the next day…
keep hearing that the reason the market isn’t rallying hard during this amazing
earnings season is that “it was all priced in”. Nothing new here. Everybody knew
earnings were going to be great, so now what?” Nah… I don’t buy it… If it were
all priced in so many companies’ stocks wouldn’t be screaming higher as
earnings are announced, only to give it all back the next day…
It’s
like “Damn, those numbers are better than we thought, and the outlook’s strong!
Buy it!” “But wait, I just read where China says ‘sure, come talk, but we’re
not sacrificing our manufacturing sector or targeting some reduction in the
trade deficit’, and the U.S. said ‘we have low expectations about this week’s
meeting, good chance we’ll be leaving early with nothing in hand.’ I’m taking
that quick profit and waiting to see how this trade thing shakes out. I mean, did
you read those comments from the manufacturing ISM? Everybody’s feeling those steel
and aluminum tariffs and they’re worried sick over more to come! So much for
protectionism being good for U.S. manufacturing.”
like “Damn, those numbers are better than we thought, and the outlook’s strong!
Buy it!” “But wait, I just read where China says ‘sure, come talk, but we’re
not sacrificing our manufacturing sector or targeting some reduction in the
trade deficit’, and the U.S. said ‘we have low expectations about this week’s
meeting, good chance we’ll be leaving early with nothing in hand.’ I’m taking
that quick profit and waiting to see how this trade thing shakes out. I mean, did
you read those comments from the manufacturing ISM? Everybody’s feeling those steel
and aluminum tariffs and they’re worried sick over more to come! So much for
protectionism being good for U.S. manufacturing.”
Sure,
there are also higher interest rates, whichcould be is a factor as
well. But if they’re rising because the economy’s rising, that’s not such a bad
thing, it keeps the market (players in the aggregate) honest and forces it to
focus on what matters; earnings. And earnings happen because people buy stuff,
and people buy more stuff when the economy’s good.
there are also higher interest rates, which
well. But if they’re rising because the economy’s rising, that’s not such a bad
thing, it keeps the market (players in the aggregate) honest and forces it to
focus on what matters; earnings. And earnings happen because people buy stuff,
and people buy more stuff when the economy’s good.
Bottom
line folks, trade’s the bummer right now. As for the near-term, a positive
outcome (i.e., nothing happens, and everyone commits to nothing happening going
forward, despite one, or both, side(s) declaring “WE WON!”) could mean a very
nice rally at a time of year when very nice rallies are rare. In terms of a negative
outcome, there are two flavors to consider: One would be no truce, but no war
(yet), just more delays to allow more time for “negotiation”: That essentially
means no very nice rally at a time of year they seldom happen anyway. The other
would be a trade war, which, let’s just say would be really ugly on virtually all
fronts.
line folks, trade’s the bummer right now. As for the near-term, a positive
outcome (i.e., nothing happens, and everyone commits to nothing happening going
forward, despite one, or both, side(s) declaring “WE WON!”) could mean a very
nice rally at a time of year when very nice rallies are rare. In terms of a negative
outcome, there are two flavors to consider: One would be no truce, but no war
(yet), just more delays to allow more time for “negotiation”: That essentially
means no very nice rally at a time of year they seldom happen anyway. The other
would be a trade war, which, let’s just say would be really ugly on virtually all
fronts.
Please
tell me this next statement doesn’t surprise you:
tell me this next statement doesn’t surprise you:
In
the end, in the beginning, and in the middle it’s all politics. And a trade war
will be as much a political mess for its perpetrators as it will be for the
markets and the economy. Which is why odds favor peace. But I have to tell you,
while it has to be simply posturing; I sure don’t like yesterday’s rhetoric. Nor
does the market; Dow down 174 yesterday, down 200 as I type this morning…
the end, in the beginning, and in the middle it’s all politics. And a trade war
will be as much a political mess for its perpetrators as it will be for the
markets and the economy. Which is why odds favor peace. But I have to tell you,
while it has to be simply posturing; I sure don’t like yesterday’s rhetoric. Nor
does the market; Dow down 174 yesterday, down 200 as I type this morning…