(Musical accompaniment by Kinky Friedman)
I toyed with titling today’s piece “FAFO”[i], because that seems to be how global investors are treating the President’s attempts to influence Federal Reserve policy, if not threatening the Fed’s independence outright. We shouldn’t underestimate how important many of our institutions are to international investors. Those include a nonpartisan judiciary and a central bank that is immune to political meddling.
We have been expressing concern about the potential end to American exceptionalism – at least from a markets standpoint – for some time. In early March we joked that Mr. Market’s long-time love affair with “TINA FOMO” was threatened by his recent flirtation with “TIA MOMO”, effectively jilting the long-held idea that “There Is No Alternative” to US stocks to become “There Is an Alternative”, and that “Fear Of Missing Out” had been replaced with positive momentum trends elsewhere. Then last week, we outlined our theory that “foreigners have been voting” in US markets, and asserted that the combination of rising bond rates alongside a weaker dollar provided the evidence.
Although the bond market indicated a steepening yield curve rather than another flight from US bonds, major US equity indices and the dollar sold off overnight. That continued into the market open as international investors digested Thursday’s comments about Chair Powell by President Trump. Those had made little impact as the week came to an early close, which I noted at the time (about 2pm EDT). To be fair, no one paid attention to my comments either…
But after a weekend to digest those statements and others, global investors fretted. Furthermore, the President launched another barrage at Powell mid-morning, calling him a “major loser”, among other criticisms. That led to a round of renewed selling, which should be obvious on the chart below:
SPX Intraday, 1-Minute Bars
Source: Interactive Brokers
The selloff is quite broad-based, with every S&P 500 (SPX) sector trading lower at this point in the session. NYSE decliners are outpacing advances by about 6:1, and only a handful of SPX stocks – 19 to be exact, right now – are currently higher on the day. Interestingly, tech stocks are not faring particularly worse, with the Nasdaq 100 (NDX) falling by roughly the same amount as SPX. This is a departure from other recent selloffs when NDX markedly underperformed.
I had harbored some hope that the selling would reverse once the European markets closed at 11:30 EDT. That occurred two Fridays ago, when a selloff ended as European investors went home for the weekend, so we will see if that applies once again this afternoon. As of now, that does not appear to be the case, though the waves of selling have at least abated for now. But -3% selloffs in SPX and NDX are hardly enjoyable. We can try to blame international investors for today’s sloppy markets, but their angst was generated right here in America.
[i] For those unfamiliar with that acronym, it stands for “F(ool) Around and Find Out”, except that it’s a different four-letter F-word that I can’t use here.
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This is what American voters have been learning – Kamala would have been a great president and the US is now on the road to become a third-world country.
This is definitely why I voted for Trump. China needs to be taken down a notch or two. Trump calls XI his friend – we know he thinks China is slimy and can’t be trusted. Many sleepy people don’t see the silent war against China or they just don’t believe it. Like most things Trump does, I believe he turns out right again on tariffs and it will benefit the country. The stock market was 25% overbought by the time Trump got elected. Doesn’t take much to pop the bubble when things are so inflated. I also agree with Trump that Jerome Powell is a puppet. He did a great job of telling us how great things were every time he got to the podium last year (which stoked the stock market) but everyone knows the economy the past couple years has been artificial with the money democrats printed. Powell was late in the “inflation is transitory” BS and how he couldn’t have seen inflation coming boggles even the most simple mind. Imagine how fake the economy had to be for inflation to emerge after its lowest 20 year rate ever. You can say a lot of things about Trump but he is not corrupt. We saw corruption at its worst in the last administration. Take China down, guard the borders, bring manufacturing back to some degree, form new trading partners. All this said, I believe China buckles and comes to the negotiating table soon.
Wake up. “Non Partisan” Institutions have been politicized. You just complain when your team isnt in control. Well put your money where your mouth is. Go ahead and short the S&P 500 and hold until the end of Trump’s term
you must be still sleeping
Make America poor again Donald?
Trump is a grifter. Why does anyone believe anything he says?
“WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!),”. “BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID.” – DJT
This isn’t Yahoo! Comments, is it? If you can’t see things objectively (without American political bias) then you have already lost the ability to think critically or independently. Subjects such as Economics, Science, Global Civics, and yes, even History have come under attack by both parties. The more you blindly and aggressively defend one side or the other, you’ve become part of the problem. No one on the “other side” is going to “see the light” and you’re not going to ‘win the argument’ or ‘show them they were wrong’. Pick and choose who and what you agree with. More thought, less emotion, maybe? Or go back to Yahoo!
Amen to that!
China export only 14% of all of there export to usa. So they doesnt care about it. USA as to have more affiortablle éducation . In that way more américain will have what it need to build new industries and then make maga
Roughly 18% of your investment money has vanished since Trump took office. That is entirely a 100% fact. It is NOT a theory. Those who voted Trump in office Own it. Don’t bury your head in the sand and look the other way. Or, blame it on the central bank or refuse to take responsibility. The experimental, super-aggressive, reckless Tariffs have failed miserably. You are losing money by the day.
This is from a very smart PhD from April 16 that to me says it ALL: Because silence can be equal to consent, I’ll add that these unfavorable market conditions are joined by other observable elements that are deeply troubling in my view: the rapid descent of the U.S. toward an autocracy that normalizes the unchecked abuse of power; dispenses with the rule of law, due process, and human rights; dismantles democratic institutions; replaces career civil servants with loyalists; systematically defunds public health research and disease surveillance; retaliates against critics; raises barriers to access of Social Security offices and earned benefits; pressures law firms not to represent clients; exploits every opportunity for self-dealing; defunds universities, purges libraries, and whitewashes museums of so-called “improper ideology”; maligns journalists and bars access to news organizations that resist absurd demands; abandons, betrays, and disparages allies; openly seeks to annex sovereign countries; floods public dialogue with disinformation, grievance, fear, division, and false narratives; expels independent Inspectors General along with the capacity of the public to demand accountability; and deliberately erodes constitutional constraints in favor of personal dictate.
It’s absolutely horrible what’s going on.
trump usa usa usa strangling china and the fed and wall street all at the same time to bring back main street it has to be done. end the endless credit card. end the fed, end the wars, bring back our jobs.
powell is just a puppet of the rothschild banking cartel. km kazarian mafia go watch the movie on you tube. socialism is kabutzism or communism . we don’t need or want this open ended credit card any longer. we are not the protectors of the world. usa is paying for everything and we can’t pay it back. these fiat currencies only last so long and they all end up like zimbabway. 50 billion dollar zim notes blowing on the highway and nobody bothers to even pick them up because they don’t even make good toilet paper.