1. Moving the Markets

Finally, at least for one day, stocks and bonds were correlated again, something we have not seen in a while, and this may be a harbinger of things to come. Bond prices dropped as yields rose and stocks headed south early on, recovered mid-day, but the rally faded into the close leaving the S&P 500 with a -0.30% loss.

Earnings reports turned this session into a choppy and sloppy one with the Healthcare index showing strength while the real estate sector got clobbered and lost -2.5%, its worst decline in some 6 weeks.

After the close, Google rose 2% while heavyweight Amazon tumbled more than 6% after disappointing quarterly results. On deck tomorrow is the always highly anticipated jobs report, which can move markets in either direction.

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1. Moving the Markets

After a weak opening, the S&P 500 managed to kiss the unchanged line, but it was all downhill from there as stocks slipped from their 2-week highs made yesterday. Not helping matters was the dying Consumer Confidence bounce with the indicator sporting its biggest plunge in 11 months.

The US dollar continued its spike upwards supported in part by ever increasing interest rate hike odds, which now have topped 70%. While that may spell trouble for equities in the months ahead, a neutralizing factor could be a continued voracious appetite for stocks, a least for the time being.

Globally, economic weakness prevails as bellwether Caterpillar seems to confirm month after month. They have now failed for 46 consecutive months to post a retail sales increase. They again missed not only revenues but also slashed full year guidance. But then again, none of these realities matter to the markets as long as we can count on or hope for further Central Bank accommodative policies.

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1. Moving the Markets

The S&P touched a two-week high as acquisitions and mergers confirmed to some that, despite hugely elevated market levels, untapped value still exists, although that is clearly in the eye of the beholder.

Expected annualized earnings are supposed to have been risen 1.1% last quarter, which is an improvement after four quarters of contraction. On one hand, this is a positive, however, on the other one also has to look at the fact that the major indexes hovering at extremely high levels, thanks to the Fed’s easy monetary policy, and are already evaluated way higher than underlying economic data would warrant. So, how much upside is left?

A potential fly in the ointment was the crash of China’s currency to all-time lows. When that has happened in the past, as in August 2015 and January 2016, stock markets have followed south and gone into meltdown mode. Will it happen again? Since no one has the answer, we’ll have to wait and see how that theme plays out and if there will be a fallout effect prior to the US election.

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