Commentary began on Monday: On the truthful society, President Trump said, “Powell’s end cannot come quickly enough!” Stock and bond markets fell as investors feared that President Trump would try to remove Powell from his role as chairman of the Federal Reserve. This is not a new basis. Trump spoke similar words during his first term. However, it seemed investors were taking his posts more seriously as tariffs shook the market.
Perhaps based on advice from his trusty advisor, Trump has stepped back. He said there was “no intention” to fire Powell. All CNBC:
“Nothing,” Trump said in his oval office when asked to make it clear he wasn’t asking for Powell to be removed. “I never did.”
Trump may recognize that high interest rates may be causing the economy compared to the economic damage and harm to financial markets that seek to eliminate Powell. Furthermore, Powell’s term ends in one year. Given Powell’s apparent determination to end his term, the long court agenda could lead to a presidential lawsuit to remove the Fed’s chairman until his term expires. Therefore, any action can be futile, yet can damage the feelings of investors.
The red circle shows the negative effects of Trump’s threatening post last week. Conversely, Green Circle emphasizes the relief that Trump has no intention of firing Powell.
What to see today
Revenue
economy
Market trading updates
yesterday, We discussed market rotation and how strong performance assets are often the source of liquidity when the market rotates. As mentioned earlier, the negativity of the dollar, markets and the economy reached a pitch of enthusiasm, where bearish sentiment surged and investors’ allocations decreased. During the revision process, when the market reaches more extreme levels, it often forgets that it is not necessary “Good news” Promotes appropriate reversal. This was certainly the case in a statement from the White House that eased the feud between President Trump and Jerome Powell, which eased China’s tariffs and support for relief rallying in the market.
However, this is likely all now, with critical overhead resistance continuing to increase in market weight over the next month or so. The chart below shows that yesterday’s rally tested a downward trend from its peak in February, but cleared initial resistance at 20-DMA. The Bulls need the market to clear the downtrend line to see a higher low from the bottom of April. With the MACD purchase signal and market not over-purchase, I was able to see the follow-through rally for several days, but there was a cluster of resistance between 5650 and 5800, which could include the rally for now.
Considering that it has fallen by nearly 20% since its peak in February, Many “I’m trapped l“Ongs” Look for exits to reduce portfolio risk. So until otherwise confirmed, investors should use the rallies to 5600 to reduce portfolio risk, raise cash and hedge accordingly. As you may know, I have previously added a small, short S&P 500 position to my portfolio. I’ll add more about this to the rally. Perhaps investors should expect a recent low retest at some point before this current revision process is completed.
This is not a time when you are overly confident in risk taking. At previous lows, you can enter stocks at a higher level than before, but the entry point is much safer for long term holdings.
Gallup poll: Economic pessimism fosters
Like other consumer and business economic votes, Gallup polls below suggest a growing financial concern. Consumer anxiety and corporate anxiety have not yet been manifested in harsh economic data, but soft data, like Gallup’s polls, warn that without advances in customs trading, the economy is likely to be softer than is currently forecasted by Wall Street. Furthermore, a decline in stock prices reduces the tendency for consumers to spend as wealth feels declining. The so-called “wealth effect” popularized by Ben Bernanke influences economic activity and plays an important role in promoting monetary policy in the Fed.
Polls could quickly flip when consumers and executives see the light at the end of the tariff tunnel. Furthermore, passing or at least debate about lower taxes and at least friendly changes to corporate regulations would further improve sentiment. Until then, however, the current environment will promote weaker economic activity and recession, but tariff standoffs will last longer.
The road ahead: surge, stall, or fall
There is good and bad news for investors who want to know if the stock market will skyrocket and stall or plummet. First, good news. This article introduces future market paths. Unfortunately, the “correct” path is one of three most likely scenarios.
Despite being unable to clearly show the path ahead, we can share technical patterns that help us guide us, and in time we can assign better odds about which of the three passes will be the “correct” pass. Importantly, it also laid out the possibilities for economic, geopolitical and monetary policy scenarios that could correspond to each forecast.
read more…
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