It appears the economic landscape is chaotic.  The dramatic shift of the Federal Reserve, trade, the use of algorithms, all drive the uncertainty in the markets and geopolitics. There are huge changes in narratives that greatly impact market direction.

March’s unemployment data will be released Friday.  The statistics could either confirm or deny the prevailing recessionary narrative, a narrative that has produced an explosive rally in Treasury prices.  Perhaps the only certainty to write is that if the data projects an environment of strength, Treasury prices will fall.

Speaking of change, oil capped its best quarter since 2009, an incredible feat given the domineering recessionary narrative.  The consensus view is that these gains will be short lived for a myriad of reasons, a view that I do not share.

Will market psychology radically change believing a potential supply shortage could occur given geopolitical and country specific macroeconomic issues?  This is the intermediate view of Exxon.

If so how will such impact inflationary expectations, expectations that are virtually nonexistent?

Will first quarter’s tail winds become second quarter head winds?  The tail winds are movement in trade negotiations and dovish monetary policy.  If trade is resolved, will growth fears begin to recede and monetary policy will again become front of center? 

What about earnings?  Will such be a catalyst or detractor?  To date warnings are about three times greater than in previous quarters.’   I am certain the earnings narrative will continue to rise throughout the week.

This indeed can be a significant week.

Last night the foreign markets were up.  London was up 0.61%, Paris up 0.70% and Frankfurt up 1.12%.  China was up 2.58%,  Japan up 1.43% and Hang Sang up 1.75%.

The Dow should open moderately higher on trade optimism and stronger than expected Chinese economic data.   The 10-year is off 10/32 to yield 2.45%.


The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.