Draghi Just Saved Stocks And Put The Fed On Hold In 2019

US Markets

  • S&P 500 Futures – Flat
  • 10-Year Treasury 2.68%
  • Oil +$0.59 – $56.89
  • VIX 16.51
  • US Dollar Index +0.18 +97.06

International Markets

  • Japan Nikkei -0.65%
  • China Shanghai +0.14%
  • Hong Kong HSI -0.89%
  • Singapore STI +0.21%
  • South Korea KOSPI -0.45%
  • Australia ASX +0.29%
  • UK FTSE -0.25%
  • German DAX -0.15%

Key Events:

ECB

The ECB today left rates unchanged and now expects those rates to stay at the current level through year-end. Additionally, they will launch a new round of quarterly refinancing operations. Today’s news is bullish for equities and multiple expansion, while bearish for the euro. In fact, equity markets are stronger since the announcement

The euro is once again on the cusp of a significant breakdown versus the dollar.  Again, this move by Draghi puts Powell in a box and essentially puts the Fed on hold for the balance of the year.

The risk of allowing the dollar to strengthen materially would kill off any inflationary force in the economy.  The Fed can’t afford for that to happen.

euro

International Trading

South Korea

Stocks were mixed overnight. The market we have been most concerned about has been South Korea and that market continues to sink. Still, the index is at crucial support, and as long as it holds, there is hope the markets won’t slip further. But this continues to be one region of particular interest at this point.

South Korea KOSPI

Hong Kong

Hong Kong also continues to pause at resistance.

hong kong hsi

US Markets

Russell

The move yesterday in the Russell was the most concerning and when you look at the chart from this standpoint you can get a sense of just how much damage was done.  I can’t emphasize enough just how important support at this 1,534 level is.  A drop below here sends the index back to 1,492. While it is not the end of the world, it will make those bearish calls louder. But as long as support holds there is a reason to be optimistic, and might have Mario to thank!

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Disclosure: Michael Kramer and the clients of Mott Capital own NXPI

Disclaimer: This article is my opinion and expresses my views. Those views can change at a moment's notice when the ...

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