1. Moving the markets

For a while, the markets looked like attempting to repeat yesterday’s feat, namely that an opening dump would be followed by a slow and steady recovery back above the unchanged line. However, mid-day the developing rebound hit a brick wall, reversed, and south we went taking out the early morning lows.

Causing this weakness was Trump’s threat to slap some $11 billion of tariffs on European Union (EU) goods, as retaliation against European subsidies for aircraft manufacturers. Considering that the trade battle with China is still unresolved, this second line of combat is seen as an additional “disrupter” of the already weakening global economies.

On the domestic economic front, we learned that job opening plunged by 538k, which was the biggest drop in 42 months. To me, that is not a surprising development given that most economic data points over the past few months have been anything but encouraging.

The stock market has been ramping higher with total disregard to underlying fundamentals, even though bond yields have been slipping and indicating that not all is well. In the meantime, the Fed has virtually guaranteed that there will be no rate hikes in 2019.

My guess is that they will likely lower rates by mid-year to stimulate activity, as the dreaded “R” word, as in recession, will likely be uttered by the Main Stream Media in the not too distant future.

Today’s pullback moved our Trend Tracking Indexes (TTIs) off their lofty levels, but they remain firmly entrenched on the bullish side of their respective trend lines (section 3).

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1. Moving the markets

A sharp early morning drop sent the major indexes reeling before buyers stepped in and pulled the Nasdaq and S&P 500 back out of the basement and into a green close.  The laggard was the Dow, because of Boeing’s production cuts, which left the index in the red.

Not helping the markets were rising bond yields, which pushed the 10-year back above the 2.50% level, while the US Dollar, which usually rallies on higher rates, dumped to the low end of its recent trading range.

In the end, it was a non-eventful trading day that did not affect our Trend Tracking Indexes (TTIs) much. However, economist David Rosenberg tweeted a picture of the front cover of Barron’s magazine implying that, if you hold the view that the opposite usually happens of what major publications feature, we could be seeing the makings of a market top.

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1. Moving the markets

The major indexes, except for the Nasdaq, were able to keep the bullish theme alive with the S&P 500 vacillating around its unchanged line before making a final spurt above it to close in the green. The Dow never dipped into the red and was engaged in a steady uptrend, while the Nasdaq was the odd man out by having a bumpy ride and falling a tad short of closing higher.

As happened yesterday, the U.S.-China trade talks remained in the spotlight with high expectations that both parties will be able to resolve their differences. Helping matters was Trump’s remark that talks were “moving along nicely,” even though no facts to back up this nicety were presented. In other words, the trade-talk-carrot continues to work wonders with equities.

On the economic front, we learned that initial jobless claims crashed to the lowest in 50 years, which provided some optimism for tomorrow’s payroll report that it would turn out better than last month’s disaster reading.

The hits keep on coming for the European economic powerhouse Germany. After growth forecasts were slashed by more than half yesterday, industrial orders plunged 8.2%, the most since the financial crisis. The cause was described as not reflecting global demand but more specific by the GDP contraction in Turkey.

Interest rates were steady with the 10-year bond yield hovering around the 2.5% level, which has been a floor over the past couple of days, as this chart shows. However, this could change tomorrow depending on the outcome of the jobs report.

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