The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Optimism running.
Futures traded flat overnight and dipped about 40 points in the premarket. This coincides with weakness as Europe opened for trading. Europe bounced around 4:30 AM and so did our futures. European bulls never looked back and neither did American ones. The S&P 500 opened flat but then climbed smoothly for the morning. We hovered in the +85 to +110 point range for the rest of the day. Tariff news dribbles out of the White House and all of it is promising. New trade deals are supposedly being contemplated and investor worries are falling by the wayside. Yields fell materially across the curve and the market presently prices in 87 bips of FOMC cuts for the year. Capital flow remains puzzlingly low at 86%.
The bounce from Monday afternoon’s lows retains its momentum and we broached the Wednesday morning high prints as well. The shorts may have been squeezed viscously yesterday on the open but the market returned to those frantic prices and went higher. The 3-day momentum is getting attention from the sidelined bulls and they are returning to their buy buttons with each tick higher. It is a slow-motion phenomenon where longs are wondering if they just missed their 2nd chance at a dip, and they are going in, albeit reluctantly.
Earnings season is quietly moving along and, most importantly, *not* shifting prevailing sentiment. Maybe something changes if some megacap announces something terrible but those are low probability events. Even with the lack of guidance from so many CEOs, due to tariffs, the market is looking through all that because the market is already starting to part the tariff clouds.
Investors are just starting to believe/pretend that tariff talk was just an ugly chapter in our past and that a some point in the not-too-distant future, it’ll be just like February.
I may think that’s an example of dreaming the impossible dream but there’s no counterfactual to point to. Maybe they will be right? Also, we haven’t seen the pain of the tariff talk yet. So we have no guess about the size of the economic and earnings hole, the optimists have us already climbing out of.
Sentiment is the one and only driver of behavior in the makets and the crowd is feeling good and thinking things will be better tomorrow.
See you then.
-Mike
IMPORTANT INFORMATION
This is general educational information and market commentary and is intended for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction.
All market and economic data herein is as of the date hereof and sourced from Bloomberg unless otherwise stated. The information is subject to change without notice and we have no obligation to update you.
This general market commentary is intended for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The views and opinions expressed constitute the author(s) judgment based on current market conditions, are subject to change without notice, and may differ from those expressed by other employees of Visdom Investment Group LLC ("Visdom") and Visdom. Past performance and any forward-looking statements are not guarantees of future results. It is not possible to invest directly in an index.
We believe the information contained in this material to be reliable and have sought to take reasonable care in its preparation; however, we do not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this material. Any securities referenced are shown for illustrative purposes only, and are not intended as a recommendation or endorsement by Visdom or by the author(s) in this context. The information presented is not intended to be making value judgments on the preferred outcome of any government decision. This information does not constitute Visdom research, nor should it be considered a recommendation of a particular investment strategy or an offer or solicitation for the purchase or sale of any financial instrument. Investing involves market risk, including the possible loss of principal. You should speak to your financial advisor before making any investment decisions. Visdom and its affiliates do not provide legal, tax or account advice so you should seek professional guidance if you have questions.
