June 17, 2018
Weekly Market Outlook
By Keith Schneider
US equities put in a mixed performance with Big Cap and Value stocks taking a hit. The Dow Industrials (INDU) ended down -1% while growth stocks led by NASDAQ 100 (QQQ) were up over +1.46 % for the week.
Quite the divergence. On a similar vein, value stocks have hit decade lows on a relative basis to growth stocks with no end in sight to that trend.
A trade war seems to be breaking out simultaneously with China, Canada, Mexico and the EU, which account for almost $1.5 trillion dollars in trade annually. If this trade war unfolds on all three fronts it will significantly reduce global trade and global equity prices. Exactly when that will happen is up for debate, but some leading bankers think it has already begun.
Emerging markets, which are highly dependent on commodity prices, got hit hard as oil, metals and soft commodities all sold off on a stronger dollar after the Fed meeting which ended with yet another .25% hike. A more aggressive stance on rates by the Federal Reserve relative to the dovish stance by the European Central Bank, along with a budding trade war, took its toll.
One interesting read this week was an article by Mark Hulbert: Link below
He states just how difficult it is to predict when the next Grizzly Bear attack on the market will hit based on classic economic indicators. This is why we prefer using charts and just a few indicators along with some old-fashioned tape reading.