June 2, 2019
Weekly Market Outlook
By Keith Schneider
US Equities got smacked once again, down more than -6% on average for the not so merry month of May. The trade war with China continues to escalate and a short term pop fizzled on Friday after Trump announced tariffs on Mexico. This was a big surprise to the markets as the US had just recently signed a trade agreement with both Canada and Mexico. It is quite unusual to use an immigration issue to start a trade war and did not go over well.
This month, US equities suffered one of their worst Mays on record and its something not to ignore. Russia continued to firm and moved back into a bull phase. The Chinese markets also held, closing up for the week. Our takeaway is this - the tradewar on multiple fronts may not be a layup for the US and some are saying we might already be in, or are about to enter, that dreaded R word.
This week’s highlights are:
Keeping a close eye on key intermarket relationships is always a critical part of our process and it gave us an advance warning that something was not right. MarketGauge’s key ratios shifted to Risk Off in early May and into bonds. Find out more about our powerful macro model called Alpha Rotation and how it outperformed the benchmark indexes by over 10% this month alone as it hit new all-time highs.
For a fun read please check out this article on Fox Business about Mish.
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Best Wishes for your trading!
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