Tuesday, April 23, 2019

This Morning's Log Entry

4/23/19 Tuesday

Equities are rallying nicely this morning on very good corporate earnings results. Interestingly, the bond market ain’t buying it (TLT [long-term treasury bond ETF] is also trading higher this morning).

It’ll be interesting to see if traders don’t fade this morning’s strength, if not today, as the week progresses.


Under “normal” conditions, this kind of price action pressing against previous all-time highs would have me humming a very bullish tune and pounding new money (recent client deposits) into equities with abandon (well, so to speak).

Thing is, I think bond traders may be onto something.

Per my comments yesterday, a sustainable move into new heights virtually demands certainty over the present state of geopolitics. This morning’s retweet/tweet by the President, alas, does not inspire certainty:  emphasis mine...

"“Harley Davidson has struggled with Tariffs with the EU, currently paying 31%. They’ve had to move production overseas to try and offset some of that Tariff that they’ve been hit with which will rise to 66% in June of 2021.” @MariaBartiromo So unfair to U.S. We will Reciprocate!"
Thing is, the EU tariff on Harleys was in retaliation (or "reciprocation") for the U.S. tariffs on steel and aluminum. So I guess we'll be retaliating against their retaliation. This is the tit-for-tat that, if it’s for real, will ultimately roil markets. For the moment, however, strong earnings rule!

No comments:

Post a Comment