"Meh": The Market's Response to the "Most Important Week of 2018"

Last week, we listed three possible outcomes for how the trajectory of the S&P 500 would evolve after we reached the effective end of 2018-Q2.

Well, we reached the effective end of 2018-Q2 with a quadruple witching event on Friday, 15 June 2018, and we may have gotten an indication of where investors are investors will be shifting their forward-looking attention next: toward the distant future quarter of 2019-Q1.

Truth be told, the jury is still out on whether that is really the case. It is still quite possible that investors are splitting their attention between 2019-Q1 and the nearer term future quarter of 2018-Q4, where they may just be putting a higher weight on the expectations associated with the more distant future quarter in setting today's stock prices. Which wouldn't be a bad outcome for investors because at least it doesn't coincide with a decline in stock prices.

As for the news of the week, which was described in some quarters as "the most important week of 2018", the market's reaction to all that news could be summarized as "meh", where even a new round of tariffs being imposed by the U.S. and China on goods exported by each to the other on Friday didn't contribute much more than a trivial level of noise to the market on the last day of the second full week of June 2018.

Monday, 11 June 2018

• Oil near flat as OPEC supply hike appears less certain
• Wall Street ekes out gains ahead of Singapore summit
  • Trump and Kim pledge to work toward denuclearization at historic summit

Tuesday, 12 June 2018

• Oil eases; OPEC cites uncertain market outlook for 2018
• With rate hike in the bag, focus turns to Fed's policy language
• Dissident doyen set to rejoin Fed's rate-setting panel
• S&P 500 ends up; Time Warner shares jump after hours
  • AT&T wins court approval to buy Time Warner over Trump opposition

Wednesday, 13 June 2018

• Oil rises as U.S. inventories fall on strong demand
• Fed lifts rates amid stronger inflation, drops crisis-era guidance
• U.S. mortgage applications fall as loan rates rebound
• Wall Street falls as Fed signals two more hikes this year

Thursday, 14 June 2018

• U.S. shale firms miss out on $70 oil after hedging at $55
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• Quick analysis: Many U.S. shale firms can make money with oil at $55 per barrel, so they contracted with buyers at that price. With oil at $70 per barrel, they're losing out on bigger profits. It's actually good news for the buyers, who are getting cheaper oil than what they would have to pay in today's market, but that will only last until the contracts expire....

• QE lives! U.S. Fed buys $1.5 billion of mortgage bonds, sells none
• Trump gets win at U.S. Supreme Court in China antitrust case
• Nasdaq hits new closing high, S&P 500 gains after ECB decision, U.S. data

• ECB to end bond buying but pushes out first rate hike

Friday, 15 June 2018

• Oil slumps 3 percent on OPEC supply, China's tariffs
• Trade Wars:
  • Trump sets tariffs on $50 billion in Chinese goods; Beijing strikes back
  • China to impose 25 percent tariffs on 659 U.S. goods worth $50 billion
  • Wall Street builds immunity to trade war rhetoric
• Fed's Kaplan says he's open-minded to fourth 2018 rate hike
• Wall Street ends high-volume session lower on trade jitters

Barry Ritholtz succinctly summarized Week 2 of June 2018's economic and market events, finding 8 positives and 5 negatives. If that doesn't intrigue you, there were also 5 "m/o/m" data points and one that was "w/o/w". (You really have to dig for points of interest on those "meh" weeks!)