July 22, 2018
Weekly Market Outlook
By Keith Schneider
The action in US equities was mostly sloppy and mixed his week as the key indexes look to be trying to digest recent gains despite a steady diet of wacky news emanating from the White House or the Kremlin. The Russell 2000 picked up +.6% while NASDQ 100 slipped -.35%.
The news feeds all focused on the shifting global order but the real show is liquidity. It appears that US bonds just showed it’s hand by failing hard on Friday after multiple attempts to regain its footing above key daily and weekly moving averages. Meanwhile, the yield curve continues to flatten.
Trump took on the Fed this week attacking his appointed chairman Jerome Powell for raising rates and his intention to continue to do so. Considering the economy is already hot and the tax breaks are bringing things to a boil, rising rates and an inversion seem inevitable. An Inverted yield curve is the best lead indicator for recessions, although timing the actual stock market decline is tricky.
The highlights of this week’s market action are the following:
One again, the overall trend of US equities is strong, but the underpinnings are fragile and watching the tape us critical.