The S&P 500 hit a fresh record high last week after global central banks pushed for more easy money. The Dow Jones Industrial Average, Nasdaq Composite, Nasdaq 100, and small-cap Russell 2000 index are all trading just below their record highs. The big take-away from last week is that easy money is here to stay which is a major driver of global equity markets. The U.S. Fed, European Central Bank (ECB) and a few other central banks all signaled more easy money is ready, if needed. Once again, in the short-term, the market is extended to the upside and due to pullback.

Monday-Wednesday’s Action:

Stocks opened higher on Monday after the U.S. and Mexico reached a deal to avoid new tariffs. Separately, President Trumps said, If China’s President Xi does not attend G-20, more China tariffs will go into effect immediately. That sent stocks slightly lower mid-day. In M&A news, Raytheon and United Technologies agreed to an all-stock merger that would create a new company with $74 billion in annual sales. In other news, Salesforce.com announced it is acquiring big data company Tableau Software on Monday. Salesforce.com will pay $15.3 billion in an all-stock deal, marking the biggest purchase in the company’s history. Tableau’s stock vaulted by nearly 40% on Monday after the deal was announced. Stocks fell on Wednesday as the market continued to struggle near resistance. Billionaire Investor Paul Tudor Jones said he expects the Fed to cut rates and that should help yields, gold and stocks rally.

Thursday & Friday Action:

On Thursday, stocks rallied as the bulls showed up to defend the 50 DMA line. Separately, oil prices jumped after two oil tankers were attacked in the Gulf of Oman. The Trump administration said Iran was behind the attacks. Oil prices jumped one day after oil hit a 5-month low. The recent drop in oil came as supply grew and concern spread that demand will decline. 

Market Outlook: Easy Money Is Back

Once again, global central banks showed up and juiced markets. The market has soared all year based on two key points: optimism that a trade deal will be reached between the U.S. and China and the Federal Reserve reversed its stance and moved back into the easy money camp. Now, other central banks have followed suit and easy money is back to being front and center for the market. As always, keep your losses small and never argue with the tape.