That is going to leave a bruise.
For it was a casual statement from the president that he favored low interest rates and a cheap greenback that roiled the markets.
Gold soared, while stocks sagged.
It was enough to cause me to stop out of a near month short position I had in the bond market (TLT) for a small loss, even though it had only five more days until expiration.
Since the middle of March the yield on the ten-year Treasury bond yield has plunged from 2.65% to 2.22%.
The writing on the wall for us traders is that the president has no hesitation about making market moving comments at any time, and reversing his views 180 degrees without warning.
Except for that, Mrs. Lincoln, how was the play?
While the presidential comments grabbed the headlines, much more ominous news was to be found in the bank earnings reports which came out Thursday morning.
Yes, the earnings themselves were great, driven by large trading revenues.
However, loan growth was disappointing, boding ill for the economy.
It is yet another example of the “hard/soft” data divide, which I wrote about so eloquently a few days ago (click here for “The Hard/Soft Data Conundrum”).
While the soft, sentiment driven surveys have been wildly positive, the actual hard data reports have been showing a decidedly weakening economy since the beginning of the year.
Gridlock in Washington is taking its toll. Expect it to continue for as long as six months.
It has been a rugged week on the trading front.
However, we did tick into yet another all time high of 22.13% for 2017 before the pullback started.
My short position in the Utilities Select Sector SPDR ETF (XLU) certainly earned its pay. You wouldn’t believe the abuse I received from perennial high dividend utilities lovers when I recommended this one.
So did my short in the SPY.
As for my remaining short positions in bonds that are further in the money, I am holding one.
This too shall pass.
The Q1 earnings reports onslaught starts next week. Some of the big names are Bank of America (BAC), Goldman Sachs (GS), American Express (AXP), and CSX Corp. (CSX).
Expect markets to remain in narrow ranges for the four weeks these reports emerge.
On Monday, April 17th, at 8:30 AM EST, the first report of the week is the April Empire State Manufacturing Survey. Watch out for surveys!
On Tuesday, April 18th at 8:30 AM EST, we receive more construction data with the March Housing Starts. March Industrial Production follows at 9:15 AM.
On Wednesday, April 19th at 7:00 AM EST, we learn the MBA Mortgage Applications.
The weekly EIA Petroleum Status Report is out at 10:30 AM.
On Thursday, April 20 at 8:30 AM EST, we learn the Weekly Jobless Claims. Last week’s number showed a big jump.
At 8:30 AM EST the soft Philadelphia Fed Business Outlook Survey comes out, which lately have been wildly ebullient.
On Friday, April 21st at 8:30 AM EST, we learn the March Existing Home Sales, giving us the latest read on inflation, which has been moderately rising.
Wrapping up the week at 1:00 PM EST is the Baker-Hughes Rig Count, which has been up for most of the last year, boding ill for oil prices.
As for me, I’m going to spend this weekend changing my flight arrangements for the coming summer.
Out with the friendly skies of United and in with Spirit Air!
I can take on one airport security cop, but not three at a time.
Good luck and good trading.
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