As we kickoff trading to start the week, is this why global markets are getting hammered today?
Fed’s QT To Create Serious Trouble For Stocks?
July 2 (King World News) – Here is a portion of today’s note from legend Art Cashin: A New Possible Pattern To Watch Out For – Longtime readers know that we cite all manner of trader folklore for possible influences on trading. Some are grand, like – Sell in May and Go Away. Others are far more arcane.
One of the most recent ones has to do with Fed bond trading. The Fed has stopped expanding its balance sheet (Quantitative Easing) and while they have not begun selling yet, they are reducing the balance sheet by not replacing bonds that mature.
Some stock traders claim that when a Fed asset matures and is not replaced, the S&P closes down that day. We may get a look today. I am told that $30 billion in maturities occur today. Let’s see how stocks close.
Overnight And Overseas – Asian markets got dinged smartly as hints of trade wars began to percolate. Japan closed down the equivalent of 540 points in the Dow. Shanghai got hit even worse, while India fell moderately. Luckily, Hong Kong was closed for a holiday.
There is widespread selling in Europe but not on the scale seen in Asia. Losses in Europe were less than half of what was seen in Shanghai.
Among other assets, Bitcoin is softer but hangs just above $6000. Gold and oil are down a smidge. The dollar is firm against the euro and yields are down a tick.
Consensus – Looming trigger dates for tariffs and new trade war posturing have bulls on the defensive in global equity markets. Doesn’t look like an auspicious beginning to the second half.
Stay very, very nimble.
ALSO JUST RELEASED: Greyerz – The World Is About To Face Another Lehman Moment CLICK HERE TO READ.
To listen to the powerful KWN audio interview with Bill Fleckenstein CLICK HERE OR ON THE IMAGE BELOW.
KWN has also released the powerful audio interview with Gerald Celente discussing what will cause the price of gold to soar, the top trend for the back half of 2018 as well as what surprises to expect and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
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