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This article was originally published on ETFTrends.com. With the constant back-and-forth of markets this year due to fluctuating news headlines, a protracted trade war, rampant presidential tweeting, and the prospect of further rate cuts by the Fed, investors are speculating as to whether we are due for a recession or not, as this bull market continues to run long. “This inverted yield curve scare looked frightening at first, but nothing dramatic has happened. The bigger uncertainty of course is these impeachment hearings, and if he survives that he might contribute for some time in boosting the market,” said Yale economist Robert Shiller on CNBC.
New evidence has been mounting that the Federal Reserve could soon take a break in its latest rate-cutting cycle, and, depending on economic data and developments in trade talks, that could happen at, or more likely, after the Oct. 29-30 meeting, say experts. Chicago Fed President Charles Evans, who had championed the last two rate cuts, said this week he foresaw no future cuts this year, though he’s open to one if economic data worsen. Meanwhile, Dallas Fed President Robert Kaplan said he’s “agnostic” on future rate cuts, and Fed Chairman Jerome Powell, said in a speech last week, that decisions are being made as needed, appearing disinterested on future actions.
This article was originally published on ETFTrends.com. With earnings season off to a strong start and markets moving up handily once again this week, stocks are now up nearly 20% this year, close to all-time highs, yet earnings growth is expected to be insignificant. “In any given year we can have these divergences take place but usually not to this degree," said Matt Maley of Miller Tabak on CNBC. Earnings went down, and the stock market was flat.
U.S. markets rallied fiercely last week after President Donald Trump tweeted that "good things" were happening, and that the U.S. had come to a “very substantial phase one deal” with China in the high-stakes trade negotiations between the two economic superpowers, last Friday. “Phase two will start almost immediately” after the first phase is signed, Trump said in the Oval Office alongside Chinese Vice Premier Liu He. Let’s think of this not as phase 1 but phase 0.5, because the US thinks they’ve made an agreement but China doesn’t necessarily believe the same.
The latest example of this vacillation occurred this week, when stocks rallied on Thursday after President Donald Trump said he will meet with Chinese Vice Premier Liu He on Friday, raising hope the two countries could make progress on the trade front, after tanking overnight when the South China Morning Post reported Wednesday night the U.S. and China made no progress in deputy-level trade talks this week. In a tweet, Trump said: “Big day of negotiations with China.
U.S. stocks were hit hard Tuesday and further brutalized today, after U.S. manufacturers posted the biggest contraction in September since the end of the 2007-2009 recession, reflecting a slowdown in the U.S. and global economies that is further amplified by a protracted trade war with China. The Institute for Supply Management released data showings its manufacturing index slumped to 47.8% last month from 49.1%, marking it the lowest level since June 2009, when the so-called “Great Recession” ended. “We have now tariffed our way into a manufacturing recession in the U.S. and globally,” Peter Boockvar, chief investment officer at Bleakley Advisory Group, said on Tuesday.
Earlier this month the Dow posted its first eight-day winning streak in over a year, with improving sentiment around U.S.-China trade relations. While there has been considerable vacillation since then ...
While there has been significant debate among Federal Reserve officials as to whether or not they will cut interest rates at its meeting today, there is generally consensus among economists that the Fed is going to cut rates by another quarter point at the end of its two day meeting on Wednesday. “Since the Committee delivered its first 25bp (basis points) cut in July, the Fed leadership has continued to highlight uncertainty about the growth outlook and pledged to ‘act as appropriate’ to sustain the expansion, making another rate cut a near certainty,” Goldman Sachs economist Jan Hatzius said. The Fed has fought the trend even though many of its officials have indicated they anticipate that the next economic downturn will see a return to near-zero rates, which former Chairman Alan Greenspan has speculated as well.
U.S. stocks fell on Monday after crude oil saw a colossal price escalation following drone strikes on a Saudi oil facility over the weekend, which has impeded more than half of the kingdom’s daily exports, or about 5% of the world’s crude production. The Dow Jones Industrial Average, which had rallied yet again on Friday, posting its first eight-day winning streak in over a year, with improving sentiment around U.S.-China trade relations, fell over 0.5%, while the S&P 500, and Nasdaq, which had already faced struggles on Friday, slipped roughly 0.3%. Traders looking to see the market target fresh all-time highs, and willing to take on some risk, could look into leveraged S&P 500 ETFs such as the Direxion Daily S&P 500 Bull 2X ETF (SPUU) , Direxion Daily S&P500 Bull 3X ETF (SPXL), while investors leery that the market is topping once again could look into the ProShares Short S&P 500 (SH) or the Direxion Daily S&P 500 Bear 3X Shares (SPXS).
The Dow Jones Industrial Average rallied yet again on Friday, posting its first eight-day winning streak in over a year, with improving sentiment around U.S.-China trade relations. While Dow closed 37.07 points higher, or 0.1% at 27,219.52, the other indices faced struggles, as the S&P 500 slipped 0.1% to 3,007.39, and he Nasdaq ended the day down 0.2% at 8,176.71. After closing on their highs Tuesday, stock index futures rallied further Wednesday evening after President Trump declared that he would be postponing the planned increase of tariffs on Chinese goods by a little over 2 weeks, as a “gesture of good will.” The tariffs, which are designed to increase to 30% from 25% on about $250 billion worth of Chinese goods, have been a topic of much debate recently.
This article was originally published on ETFTrends.com. With markets once again within less than 1.5% of all time highs, investors are concerned that these lofty levels could be derailed by global and economic events such as a Fed rate cut, or lack of one. One analyst weighs in on CNBC as to how economic data play into the markets and what the upcoming Fed meeting is likely to hold. Producer Pricing Index (PPI) data could weaken some according to Jay Bryson, Wells Fargo acting chief economist, which would reflect an overall decline in industrial production, which the Fed will take into consideration.
Despite the slight downdraft on Monday, technical market analysts, who watch stock charts rather than look at fundamental news, see a chance for stocks to break above previous highs made in July, after the S&P 500 rose above its 50-day moving average last week and crossed above August highs, two signs of positive market strength. After a fall-off in late July and August, the S&P 500 has been mostly positive in September, climbing back to within 1.5% of all-time highs, amid more muted trade war tensions and optimism that there may be more rate cuts on the way. “For the camp that wants to see new all-time highs, they would like to see the S&P 500 to hold 2,940 to 2,955.
There is significant debate among Federal Reserve officials as to whether or not they will cut interest rates at the next meeting this month. Globally there is a strong trend toward zero and negative nominal rates on sovereign debt, which has been proliferating across the euro zone to Japan and beyond. The Fed has fought the trend even though many of its officials have indicated they anticipate that the next economic downturn will see a return to near-zero rates, which former Chairman Alan Greenspan has speculated as well.
This article was originally published on ETFTrends.com. With the global economy stagnating, Brexit looming on the horizon, an ongoing trade war with Beijing, and an economic slowdown from China that has sent reverberations throughout emerging market economies, which have seen a decline in exports, experts are now split on whether or not the Fed should raise interest rates, as they try to gauge the state of the economy. At least one expert believes the Fed should continue its judicious approach to rate cuts, claiming the economy is more robust than many believe. “If the Fed is going to let the market dictate what they’re going to do, they shouldn’t even be on the Fed board.
Inverted yield curves and the U.S.-China trade war are fueling most of the investors’ worries, which could provide more fodder for a global economic slowdown. In 2018 and 2017, the S&P 500 has posted returns of 0.4% and 1.9%, respectively. In 2016, the S&P 500 posted a slight loss.
Market maven Jim Paulsen is brimming with confidence that a breakout will occur before year's end. August's market doldrums are setting up for an equally tepid September, but it will create market opportunities for savvy investors. Just as President Donald Trump announced new tariffs and then scaled back on certain items on the list of Chinese products, the markets were sent on a volatility rollercoaster ride.
This article was originally published on ETFTrends.com. In the Oval Office on Tuesday afternoon, President Trump said, “I think the word recession is a word that’s inappropriate because it’s just a word that certain people, I’m going to be kind, certain people and the media are trying to build up because they would love to see a recession. The Fed should make sure it stays that way,” Cramer explained on CNBC's Mad Money. Cramer expressed that the current positive economic data could look rosy right up until the minute that it doesn't, and that tariffs are a problem for companies other than the big retailers like WATCH: Walmart, Amazon, Target, Costco, and Home Depot, or some of the retail companies that are most key for the economy. “Sure we have the lowest jobless rate since 1969, but you know what, I’m old enough to remember that we had a recession in 1969.
Last Wednesday's brief inverted yield curve came after the U.S. removed some items from list of new China tariffs and the additional duty on other goods is postponed to Dec. 15. “Historically speaking the inversion of that benchmark yield curve measure means that we now must expect a recession anywhere from six-to-18 months from today which will drastically, and negatively, shift our medium-to-longer term outlook on the broader markets,” Tom Essaye, founder of The Sevens Report, said in a note on Wednesday. Then Wednesday the yield curve inverted yet again. Soon after the Fed’s 2 p.m. ET release of its minutes, the curve between the 2-year note and the 10-year note flattened out before briefly inverting again Wednesday afternoon, with the 2-year yield rising above the 10-year yield.
Trade wars will continue to play a hand in the latest market oscillations, but the recent pullbacks could present buy-the-dip opportunities for leveraged exchange-traded funds (ETFs). Just as U.S. President Donald Trump announced new tariffs and then scaled back on certain items on the list of Chinese products, the markets were sent on a volatility rollercoaster ride. Traders can take advantage of these markets movements in the S&P 500.
Trade wars and yield curves are certainly a two-headed dragon that’s been plaguing investors as of late, breathing a heavy fire of volatility all over the capital markets. Traders are betting that this volatility isn’t a temporary scourge and will continue. Traders have been quick to pile in on options contracts targeting the VIX volatility index.
With the capital markets looking for a looming rate cut to boost U.S. equities sometime in 2019, a short-term play could be the forthcoming volatility ahead as Federal Reserve Chairman Jerome Powell testifies before congress this week to apprise lawmakers on the strength of the U.S. economy. As such, traders can take advantage of S&P 500 leveraged exchange-traded funds (ETFs) for short-term gains. Potential leveraged ETF plays in the Direxion Daily S&P500 Bull 3X ETF (SPXL) and the Direxion Daily S&P 500 Bear 3X ETF (SPXS) could have traders placing these ETFs on their watch lists.
With the majority of capital markets looking for a looming rate cut to boost U.S. equities sometime in 2019, it might not be as necessary for a rally as most might think, according to PNC Financial co-chief investment strategist Jeffrey Mills. If the bulls are wrong, of course, it also gives inverse ETF investors a chance to reap gains. SPXL seeks daily investment results of 300% of the daily performance of the S&P 500 Index.