The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Auctions?
Things looked pretty typical early on. S&P 500 futures rallied a little overnight and significantly further during European trading. The index opened +35 and wandered up there until 10 AM. June Final wholesale inventories (0.1% vs 0.2% est & 0.2% prior) disappointed at that time but this was not the cause of today’s selling, it just coincided with the beginning of the slide. The tape traded heavy for the rest of the session. The trend was consistently down, slow, and calm. Bulls made efforts to turn the tape but they didn’t work until late. In the afternoon, a weak 30-year Treasury auction threw cold water on investor appetites for equity upside. Yesterday had a weak 10-year auction too, which was ignored. Now people are perking up their ears and wondering is something is amiss. Interestingly, the yield curve didn’t move much today. So whatever we *suspect* might be negative about these recent auctions, it’s not bothering the Treasury market.
Maybe we’re just playing some chart-games right now? We had dips, we had subsequent rallies, leading to subsequent dips. There are no major technical levels in play so whoever is trading technically, they aren’t all using the same consensus signals. It might explain the alternating blows between the bulls and bears.
Tariff talk was in full effect again today. The tasty morsel of the moment concerned microchips. There will be huge tariffs on chips unless they are built in the US. Of course, there isn’t much chip manufacturing here so the tariffs will be devastating although they can (will?) be removed if companies begin building manufacturing capability in the US immediately. Apple announced a $100 billion investment from the Oval Office so they will be exempted from the tariffs (we think). AAPL stock rallied nicely today in response. It *appears* that Apple has been working with the President to accommodate his wishes and avoid the nasty tariff consequences that pressured the stock for most of the year.
Tim Cook gets the attaboy of the day.
Anyway, like so much tariff talk, we only think we know what we need to know and we can only wait and see for how the President changes things at some point down the line. It’s quite a predicament.
The macro calendar is uneventful tomorrow so if a catalyst is going to shake up the markets, it’ll probably come from the White House. I wonder what’s in store.
If the White House is actually quiet, we’re looking at a summer Friday with the S&P up more than 1% for the week, about 2% below the all-time highs, and about 2% above the August lows.
That’s not technically compelling for a bull nor a bear. I guess the tiebreaker goes to the long-term trend… I’ll give you three guesses about who that favors.
See you tomorrow.
-Mike
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