The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Nothing new.
November is beginning without significant news and the market is rallying in the absence of zinger headlines. No news is good news this year. The S&P opened up about 35 points but quickly gave up the morning pop. By the late morning, the tape found some stability in the +10 to +20 point range and hung out there. The equity rally continues in slow motion even though bonds didn’t help today. Treasury yields climbed 1-6 bips across the curve. Probabilities for a 25-bip cut in December are 67%, about the same as Friday.
There’s a bit more chatter in the financial news sphere about the continuing government shutdown and what it might mean should it continue significantly longer. Markets haven’t hinted at concern yet though. At the moment, shutdown implications remain questions posed out loud but neither concerning nor answered. I worry about when the market gets worried.
I also happen to think it’ll be a dip worth buying but I still worry about the fear it will create. If the market gets scared enough to sell off 5 or more percent, it’s easy for me to say “buy that dip” now, in the calm before the storm.
At the hypothetical moment of peak shutdown fear, there will be good reasons to think that things will already be broken and irreparably harmed. The risk of material damage to the economy will be so great that it can’t be ignored *and* that it could actually manifest…. And so we’ll get a nasty selloff
I hate the games of chicken that D.C. and the markets play. Everyone *knows* that someone will blink but what if?
The good news is that nobody is worried. It’s just me and a few talking heads on TV. I hope we’re just nervous Nellies on this one.
That said, we’re heading into a new week with near-zero economic data, no tariff talk, and no shocking global headlines. The track record favors the bulls in an environment like this.
The S&P 500 is up 6 months in a row. It is up about 16.5% year to date. The consensus view is that we’re in the middle of a bull market and the rest of the year will be a continuation of the trend. That may be a naïve view, but it won’t get derailed without a significant catalyst.
See you tomorrow.
-Mike
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