E Market Briefing For Monday, Jan. 14



(Hard to say; but aside not wanting to lose 'delivery slots', China might be rather pleased because of a controversial Boeing satellite sale to China.)

So why in the world would we be buyers on 'confirmation of strength', when in reality that's time to pull back a bit. So yes, you could get a 'pop & flop' or similar unsustainable run-up, 'if' they get the news they want (ending a very unacceptable Government shutdown is only part of what markets want; with of course realization that it becomes more costly than any 'wall' the longer it persists). Markets worry about the Fed (they'll keep chattering; but policy is unlikely to 'actually' shift; though it may see an ease of the pace of QT); and of course about China Trade.   

In sum: very little has changed beyond what we've discussed all week. So I will limit comments accordingly; since we all know where we (at least my views) are at the moment. I think the movement up in Oil and stocks from more or less Christmas Eve, also helped relieve High Yield pressures; and it all sort of correlated. But that already happened with our 'seasonal relief rally'; and there isn't a lot of confidence, liquidity, or excitement about any of this. And that transfers to perhaps a messy earnings reporting period just ahead.


Conclusion: regardless whether we 'formally' slip into recession (nuances evident since Spring of 2018 in my view as you know); economic prospects are sloppy; and mixed at best. This will have psychological relief, but won't necessarily improve earnings in the short-run, even with a trade deal.  

Most market skeptics either want to buy into strength; or fade rallies; while a never-mentioned reality is most managers are desperately trying to commit a fair amount of seasonal (retirement and so on) income into stocks; trying to lift what they 'forgot to sell' many months ago; for overall performance. In reality it's a market led by levered stocks are and were overpriced, and for the most part (not entirely) remain expensive given forward prospects.  

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