The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Let’s get out of here.
US investors just wanted to get to the 3-day weekend as fast as possible and the headlines cooperated. There were some troubling headlines about Trump considering/trial-ballooning firing Chairman Powell but they didn’t rattle markets, which is is a lucky break for the longs. The S&P wandered around a bit during the trading day but didn’t go anywhere with gusto. Ditto for bonds. Capital flow was light at 84% so a lot of capital was happy to sit this session out.
The state of the world isn’t too different today and markets reflected a single day of the status quo. Who knows what the long weekend will bring but there’s no sense in worrying about it. It’ll be whatever it’ll be and if you can’t tolerate it, you should’ve already gotten out. Markets have made peace with the new volatility regime and they aren’t pricing in a return to low vols anytime soon. The President has increased the overall risk of the market and that change is long-lasting.
Normally I would advise you to hold on and attempt to endure the storm but that’s only advice for a short period of time. We are going to sustain above-average market gyrations until the tariff situation is essentially concluded and a recession, if one comes, is behind us. It is also possible that the market not only experiences more volatility but also drifts lower. We are about 7% away from an official bear market.
So, we’re either *in* a bear and it’s not yet official, or this is a remarkable dip in the midst of the bull. Each of us has a view. The volatility in both worlds is/will be greater than usual.
See you Monday, have a great long weekend.
-Mike
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