The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Summer trading
Activity in the markets was sleepy, although the Treasury curve did come in some. Crude came in nicely as well. Stocks didn’t get help from those markets however, which was a bit odd. The S&P opened down about 15 points and traded in a sleepy range during the day. Capital flow was light again, 78%.
There were some interesting headlines today, but they didn’t shake up the market. The first big interesting news story was that the Treasury might use some of their cash in their Treasury General Account to do/increase bond buybacks and push the yield curve around. There’s about $935 billion in that account. That’s a lot of money to shape the yield curve. It is doubtful they would use it all but even $100 billion is a lot. It is doubtful the market, in its current mindset, would fight that sum of money. Anyway, that story appears to only have influenced the Treasury curve. It did not push stocks into positive territory.
The second interesting news item was the economic D-Day announcement. The US is going to focus on Iran’s most vital economic lifelines: digital assets, technology, gold, aviation, and shipping. Additionally, the US will economically punish other countries if they continue to trade with Iran. The crude market appeared to appreciate this announcement. The rest of the market didn’t react. The expansion of penalties to other countries is a significant change in the situation. Whether it works or backfires, remains to be seen. Presumably, the penalties will be tariffs, but who knows. If a whole new wave of tariffs and trade wars start up…. Well that’s going to be bad for inflation. I don’t see too many positives down that path. Maybe it’s just me though because most markets didn’t care. We shall see.
OK. So I found two headlines noteworthy. The stock market did not. Stocks traded like it was a lazy summer day, which I guess it is. So nothing to see here. Maybe tomorrow brings something different.
There *should* be some kind of market action Wednesday through Friday. Nvidia announces after Wednesday’s close. Wednesday through Friday is the the Fed Jackson Hole event.
See you tomorrow.
-Mike
Visdom Market Commentary
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