Daily Trading Markets Commentary

» Posted by on Dec 20, 2018 in Uncategorized | 0 comments

Stocks are steady to mixed this morning as traders adjust to another Fed rate hike. Mostly as expected, the Fed raised its benchmark interest rate a quarter-point. This was the fourth rate increase this year and the ninth since it began normalizing rates in December 2015. Fed officials did however slightly lower their projection of rate hikes down to two for next year.

The problem seemed to be the language from Fed Chair Jerome Powell, in the post-meeting press conference, which the market digested as somewhat mixed and adding more “uncertainty” than “clarity”, hence we sold-off aggressively the more Powell spoke.

Keep in mind, the S&P 500 has now fallen for a record 7th straight Fed Day, which is a streak that began when Powell became Chair.

I’m thinking the market can’t figure out this guys personality or delivery. As we’ve learned through the years, regardless if he is right, it’s all about perception. At the same time, we have ongoing economic concerns brewing inside China, Europe, and Japan.

We also have uncertainty in Washington surrounding the budget, a rising federal deficit into rising Fed interest rates, the Mueller investigation heating up, and a fresh wave of new Democrats ready to take office and take over leadership in the House.

There’s really not a lot on the economic calendar for today, but tomorrow we will be digesting updated GDP, Durable Goods, Personal Income and Outlays and Consumer Sentiment.

From what I can tell, most of the data should reflect a fairly strong U.S. economy. I continue to keep a close eye on weakness in U.S. housing and energy.

Perhaps one bright spot is the recent weakness in the U.S. dollar, which to this point has been an extremely crowded bullish bet. If the dollar continues to weaken, perhaps we catch a little tailwind for stocks and commodities.

I might be grasping at straws thinking weakness in the dollar can help save the currently drowning stock market, but if we get past a few of these other global uncertainties and scratch out some type of trade deal with China, then perhaps we can stabilize and start building back a little momentum to the upside.  One Defense might be Alternatives in Managed Futures.   

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