E Market Briefing For Monday, Aug. 19

Really the very short-term Treasury rates have been inverted for nearly half a year; while the financial mainstream focus has only been 10's vs. 2's more recently. During the earlier phase (distribution under Index cover) the broad market already declined, which is part of why they now only meander or just erode (or firm) slightly; while risk transferred to the big-cap 'Grand Dames'.

  

The Grand Dames (FANG and a few others) get the 'press' so are featured during the 'race to the bottom' by rates, which as I've argued before others, as they mostly say now, becomes an ineffective 'pushing on a string' by Fed efforts; and in-fact increases risks by eroding confidence as it creates great curiosity as to 'what in the world is going on' among citizens in-general.

Stimulative actions (especially such as Blackrock and others calling for big 50 Basis Point declines next) are actually counterproductive. Since getting it with the economy not broadly weak (but slugglish and slipping nuances for over a year) with negatively impact confidence and reduce the Fed's ability to actually intervene effectively, should be actually get a meltdown (and that risk is still there, especially if no China deal is forthcoming next month).  

  

Bottom line: this work-in-progress attempts to be an effort to 'immunize' a fairly healthy patient, who is coughing a bit (as am I); but isn't officially sick. That may help; but it's preferable to keep strong antibiotics 'in-reserve', just in case the patient gets really sick.  

To wit: don't hit a cough with what really is an 'elephant gun' too soon. And especially when that elephant gun only has a small amount of ammunition remaining. You have negative rates all around the world; and we're reacting to that (some like most on Wall Street and the President think it appropriate) perhaps because almost all of them are fully invested or relying on holding the market together at extremely high S&P levels for their own reasons.  

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