1. Moving the markets

The major indexes set new closing records, unimpressed by the ongoing impeachment saga, the result of which has been simply brushed aside.

Market concerns are virtually non-existent, since the Republican-controlled Senate will be the final judge with expectations being that they will vote against having Trump removed from office.

In other words, from a market perspective, the impeachment is meaningless and a non-event.

Positive vibes, that the US-China trade “truce” will hold, continues to lend support to equities with traders considering recent economic data points as temporarily stabilized.

Even today’s Existing Home Sales Report, showing an unexpected tumble in November, could not shatter confidence.

Of course, the ongoing short squeezes gave an assist to the bullish theme, as they have done for the past 4 days straight, even though today we only saw an opening and closing ramp, as Bloomberg’s chart shows.

On deck for tomorrow is options expiration day, which can cause more market fluctuations than normal, but it’s unlikely it will have any effect on the major trend.  

1. Moving the markets

The markets started this Wednesday by inching higher with traders looking to keep a 5-day winning streak alive. Supporting this optimism was the firm belief that the preliminary US-China trade agreement was a done deal, despite some nervousness as to when it would be signed. However, the lack of news to the contrary, was a positive.

Also lending an assist were waning concerns about the global economic outlook. Although yesterday’s US econ numbers painted an improving picture, except for FedEx, which reported disastrous earnings while slashing guidance. This clearly shows the disconnect between the market and the economy.

The situation remains questionable at best, especially when viewing Eurozone data. After all, pushing interest rates into negative territory, and keeping them there, is not a sign of economic strength; in fact, it is exactly the opposite.

However, stocks remain backed by the Fed stepping in and providing liquidity to get a handle on the unraveling of interest rates in the overnight repo market, which started in September. While this crisis is far from being over, traders and computer algos are simply ignoring it for now—that is until that day arrives when even more emergency stimulus is needed.

In the meantime, the major indexes managed to meander higher, while enjoying another session in record territory, even though they faded into the close.

1. Moving the markets

The major indexes opened to the upside, pulled back but managed to bounce around the remainder of the session and, in the end, eked out another green close, although a small one.

The main supporting cast today included positive economic data with manufacturing rebounding and single-family building permits reaching a 12-year high. Job openings rose from October but hiring tumbled.

Good economic news pales in its impact on the stock market compared to headlines about US-China trade talks or the Fed’s spiking the punch bowl via lower rates or more QE. None of that was in the news today, so it was up Trump to keep the good times rolling by focusing on the Fed and tweeting:

“Would be sooo great if the Fed would further lower interest rates and quantitative ease.”

“The Dollar is very strong against other currencies and there is almost no inflation. This is the time to do it. Exports would zoom!“

As ZH, pointed out, what about the fact that the dollar has tumbled since the Phase One deal was completed? And the Fed is printing money at its fastest pace since the financial crisis, as this chart shows.

Looks to me that they have been more than compliant with Trump’s wishes, whether you agree with the policy or not.

Be that as it may, it looks like the bulls will keep running despite earnings expectations being in retreat mode.

1. Moving the markets

The markets continued their bullish ways into a new week with the supporting actor being the upbeat mood caused by last week’s preliminary trade deal between the US and China.

Despite of all the hysteria, many questions remain over the details of the much-hyped “phase one” accord. The Chinese were pleased, because it included a partial rollback of some tariffs and the ditching of further duties on imports.

If we can believe US trade representative Lighthizer, then the phase one deal is “totally done” and goes beyond agriculture and addresses intellectual property issues, financial services and their respective enforcement provisions.

Still, come contentious issues will need to be resolved, but that would be done in the “phase two” talks, which still must be scheduled. The “phase one” deal is supposed to be signed in January.  

Bond yields continued their roller coaster ride by jumping 5.3 basis points to end the day at 1.88%, but equities were in a world of their own but, while coming off their early highs, still managed to score solid gains.

Supporting the bullish trend was another giant short squeeze, which crushed any remaining bearish sentiment that may have been waiting in the wings. Short squeezes have been a major support tool designed to keep the upbeat mood alive.

But in the end, the powerbroker to drive this market has been central bank liquidity, as this chart demonstrates. Without it, we would be celebrating the upcoming holiday with considerably lower index levels.