1. Moving the markets

Not just US futures, but global markets as well, hit the skids early on, a sight which we have not seen in some 5 weeks, as the markets have been on a tear ever since dumping during the first 2 days of October.

The two catalysts for the early thrashing was simply lack of optimism on the trade front with Trump saying that discussions with China were going “very nicely” but cautioned that recent reports about an agreement to roll back tariffs weren’t accurate. He added that “the level of tariff lift is incorrect” without further elaborating.

Adding to this uncertainty was a sudden explosion in violence during the 24^th straight week of protests in Hong Kong with one protester seriously injured while another one was set on fire.

That was enough to send the markets reeling, but a pullback of some sort was way overdue, and today’s events simply provided a reason, which was also helped by the fact that the bond markets were closed for the holiday.  

Then a White Knight appeared in the form of the much beaten up Boeing Corporation, which announced that its maligned and grounded fleet of 737 MAX could “see return to service early next year.”

That was exactly the impetus the computer algos needed, the bottom was established, and up we went. The Dow was the main beneficiary by going green, with the other two major indexes heading towards their unchanged lines but falling short of closing above it.

The major market trend remains up, but I would not be surprised to see some weakness over the next few trading days, unless of course, a new lipstick is applied to that trade pig.

1. Moving the markets

With the earnings season fading away, the US-China trade disagreement moved to center stage again, with positive statements stoking the markets and continuing the relentless push higher.

This happened again in the face of sharply rising bond yields with the 10-year jumping an amazing 10.57 basis points to end the day at 1.92%. This was an aggressive rise in yields, an event that in the past has always been a bad omen for stocks, so will it be different this time?

Today’s ramp started early on when the futures market set the bullish tone after China said that the US had agree to roll back tariffs. The alleged agreement was that China and the US would roll back tariffs on each other’s goods in phases while working towards a trade deal, the optimism of which has now contributed to the rally over the past 5 days.

For sure, the market’s mood kept getting better with some analysts arguing that any resolution would halt or at least slow down the current path towards the much-feared global recession. At the same time, some of the slowing countries like Europe, Japan and even China may have bottomed in terms of their economies weakening; at least so goes the hopeful thinking.

Then came a cool wind of reality when Reuters reported that according to “sources” the White House plan to roll back China tariffs “faces fierce internal opposition,” which yanked the markets off their lofty intra-day highs but still enabled the major indexes to score another winning session.

And so, the saga goes on…