Quote of the Day

Bloomberg market strategist Mark Cranfield pretty well echoes our present concerns:

"Investors in U.S. government bonds and equities are both enjoying solid returns this year, yet that relationship may not hold if growth data weakens significantly.

While the Fed is expected to do an insurance rate cut this week, it could be seen as being behind-the-curve if GDP slips toward the 1.3% area forecast by the Atlanta Fed GDP Now. Which includes a projection for exports to contract at the worst pace since 2015.

Such an outcome would suggest that stock earnings will be facing severe headwinds by the end of this year. Third-quarter S&P 500 earnings are seen shrinking, in part because of the trade tariffs which are already in place and causing an unwinding of the globalization theme.

Even if the U.S. avoids going into a technical recession, the positive effect of lower yields for stocks may not last too much longer."