Markets stocks

Amid The Worst Stretch Of The Year For US Stocks, The Real Question Is: Why Isn’t It Worse?

"Why are equities so calm if the most plausible outcomes of the trade war are all bearish for growth?"

"Why are equities so calm if the most plausible outcomes of the trade war are all bearish for growth?"
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7 comments on “Amid The Worst Stretch Of The Year For US Stocks, The Real Question Is: Why Isn’t It Worse?

  1. Peter Schiff in his latest podcast episode makes a good point….if there ends up being some defaults on big name companies (i.e TSLA) then you might see a domino effect because Junk rates aren’t priced much higher than treasuries… As was mentioned above…there has basically been 10 years where investors can stay long through everything and still keep doing well year over year through all sorts of “risky” events that didn’t really end up amounting to anything.

  2. Good post and a good question. I would suggest another driver of the strong/resilient market performance: Trump has a lot of support among people who are invested in the market and their portfolios are still showing very healthy gains. And…Trump is a bully and a coward — which is what some people call the art of the deal. I am certain Trump will cave before Xi and the CCP does. But beware the black swan — this could all go south in a hurry.

    • Marko’s explanation is spot on: A Trump collar. Despite Trump’s bullshit bravado, I think he knows that a 3 percent-5 precent decline in the Dow (not S&P) drives his already high unfavorables into dangerous territory. A 5 percent- 10 percent decline going into 2020 seriously weakens his support among the gutless Republican pukes in Congress. A more than 10 percent decline into 2020 and he loses and ends up in jail, along with his obnoxious son Gumby Jr. At the end of the day, the stock market is the only thing that gets Trump reelected. (There aren’t enough bigots and racists in Michigan, Pennsylvania, and Wisconsin to do it a second time.) Cadet Bonespurs will cave in the trade war, and Xi knows it. Long Huawei.

  3. Observations

    SP500 has made 2 attempts to exceed the Jan 2018 highs and had not been able to sustain that level so 2850-2950 seems to be the limit at this time. That is concerning esp if this economy is the “greatest” ever.

    Yet the DJ Transports have been been unable to test, let alone, recapture the Sept highs and broke down hard this week. 10 year bonds to 2.3% when one can get 2.2% in an online bank savings account?!!! I believe both of those are speaking but one has to listen.

    Why haven’t investors listened? I don’t know. Maybe the Fed saving them every time the market sneezes. The buy and hold siren song has worked for 10 years. And go to bonds or cash? Unthinkable esp if one is trying to boost retirement accounts.
    Besides the market always comes back, just have to hold on, dollar average….ask the Japanese who have been long and underwater since 1989.

    Things work…until they don’t….;)

  4. The battle is between Trumps desire for the DJIA to be moving upward (Trump’s “proxy” for the economy) versus his desire to “win bigly” the trade war versus China. It’s the Trump “put” vs. Trump’s ego. The stock seems to be siding with the put, at least for the moment.

  5. Buybacks! Corporations buying $Billions of stocks. Without buybacks, this market would be toast.

  6. There is a huge difference between being perplexed or surprised by this market behavior and offering an articulate creative explanation, Indeed we have all seen this before in 2000 and in 2009 where equities for the longest time defy the laws of reason and also gravity.. I was out in both cases ,,,call it luck or chickens…s..t with cold feet… That having been Charlie get the prize for best creative articulation … H …you can share for repeatedly alerting us….of the perils……This time is no different even with a ‘madman” at the helm…(Trump) offset by the ranks of his insane base as well as Kudlow, Bolton and Pompeo… The Tina effect and the daily dose of anesthesia …. gives you what we have today..
    Holy Schmoley….is this for real or one of Shakespere’s dreams scenarios….

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