1. Moving the markets

The major indexes whipsawed throughout the session, however, all action happened above the unchanged line with the tech sector having its best session in over a month.

Helping the positive mood were reports indicating an easing of trade tensions with especially Germany’s car sector enjoying a nice rebound after one newspaper published an unsubstantiated report regarding zero tariffs for cars to the US.

The Fed minutes were in focus as policy makers saw “negative risks” from US trade policy and elaborated that more tit-for-tat could have “negative effects on business sentiment and investment spending,” hardly an earth-shattering conclusion.

Then this: The Fed said there was “broad support for continued gradual increases”, despite some fallout from the negative impact of the trade wars. In the end, it was mentioned that the federal funds rate could be at or above its neutral level sometime next year, and projections were for two more rate hikes in 2018, which translates to one more than expected.

Despite this hawkish assessment, the markets faded only a bit and then popped with the major indexes closing near the highs of the session.

On deck for tomorrow is the all-important and potentially market-moving jobs report, which had a negative front runner today, AKA the ADP private sector report, which showed a gain of 177k jobs in June vs. an expected 190k. We’ll have to see if that weakness affects tomorrow’s payroll as well.

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1. Moving the markets

Yesterday’s late recovery rally continued this morning, but suddenly died, as momentum reversed, which sent the major indexes diving into the red. Weakness in tech and financials eclipsed positive moves in the telecom, energy and real estate sectors.

Contributing to the tech sectors downward swing was Micron Technology, which appears to have been a casualty of the US/China trade war after China announced that it was blocking the firm from selling some of its chips in China. It was made clear, however, that this was only on a temporary basis.

The strong US opening was assisted by prior gains in European markets where a last-minute deal on immigration in Germany saved not only Chancellor Merkel’s coalition but also possibly her job.

In the end, volume was low as many traders were absent, and will probably remain so during this Holiday shortened week. Low volume moves can be extreme, but they may not be necessarily a prognosticator of things to come.  That’s why I would not read too much into this week’s activity.

Happy 4^th of July!

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1. Moving the markets

It was weak start to the 3^rd quarter with the major indexes diving right after the opening bell, with the old stand-by, namely escalating trade tension, being the culprit and weighing on sentiment.

Despite this negative influence, a mid-day recovery, on the back of a rally in technology, turned things around and early losses were reversed, and we ended up seeing green numbers at the close.

Despite a positive finish, the trade battles go on, as the European Union (EU) has now threatened to respond with tariffs of $300 billion in US goods after Trump’s warning to slap a 20% tariff on auto imports from the EU.

And the game goes on: Tit for tat until eventually hopefully cooler heads will prevail and establish fair and just deals that everyone can agree to. In the meantime, the markets will remain in roller-coaster mode and react to the latest headline du jour.

On deck, and widely ignored, is the fact that the Fed’s QT program (Quantitative Tightening) will increase to $50 billion/month late in July from its current $30 billion. Makes me wonder how the markets will react, because, at the same time, the EU is fiddling with its reduction in QE (Quantitative Easing)?

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