The NYSE McClellan Oscillator flipped to black late in the week prior to the last, and usually that bodes well short term. Indeed that foreshadowed a nice week. TRADE WARS ™!!!! certainly seems like a “sell the rumor, buy the news” event.
“Given the rhetoric over the past few weeks, it seems like the probability of a trade war has increased. However, in the short term I still think there’s a relatively low probability that one will actually occur. And in the meantime, U.S. economic data has been good, and the Street knows this will be a good year for earnings,” said Scott Wren, senior global equity strategist for Wells Fargo Investment Institute.
“With the prospect of a positive earnings season ahead of us, investors seem to have forgotten the threat of further trade tensions,” said Konstantinos Anthis, head of research at ADS Securities, in a note Tuesday.
Wednesday was the one day the indexes took a hit (momentarily) after the White House late Tuesday said it would assess 10% tariffs on a further $200 billion in Chinese goods.
The new tariffs won’t take effect for at least two months, administration officials said, giving U.S. industry time to comment on the products selected for levies — and for the two sides to start a new round of talks.
“This is different from the other trade announcements, because the size is significantly larger, and because China is unable to directly reciprocate at $200 billion because they don’t import that much. It’s unclear what it might do next, but it is clearly another step closer to a full-blown trade war,” said David Carter, who oversees about $2 billion as chief investment officer at Lenox Wealth Advisors.
Bloomberg reported late Wednesday that officials from both countries have raised the prospects of restarting a conversation at a high level.
Earnings season began in earnest Friday with financials – earnings are set to explode this quarter on the back of massive tax cuts enacted late last year. Economic reports for the week were not market moving.
For the week the S&P 500 gained 1.5% (two weeks in a row) and the NASDAQ 1.8% (after a 2.4% increase the prior week)Continue reading