05 Jun EQUITIES REBOUNDED SHARPLY ON COMMENTS FROM POWELL

Posted at 12:57h in Market Commentary by
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As widely known, the Dow is down for six consecutive weeks. Will this week be the seventh? Bespoke Investment Group states that since 1900 there have only been seven 7-week losing streaks and just one 8-week losing streak.

The causes for the recent decline are well know; trade, economic activity, and now regulatory pressure.

Commenting about regulatory pressures, Citicorp wrote yesterday FAAG’s losses Monday eclipsed a $140 billion. In my view most have been narrowly focused on a few growth names, names that have dominated all upside in the markets at the expense of every other issue.

The question at hand has the illusion of remaining “safe places” been shattered?

Regulatory purview is not a short term affair. It lasts forever with an infinite number of outcomes.

In my view, the markets have never been this imbalanced, defined as so much money concentrated in a few names. An imbalance amplified by different trading technicals that emphasizes speed and cost of execution over liquidity and capitalization.

As stated above, equities staged a strong oversold rebound on the headlines that FRB Chair Powell would be receptive to an interest rate reduction if needed over trade. In my view, this statement is consistent with past statements as the Committee has repeated commented that any change in monetary policy will be dictated by economic activity.

I ask a rhetorical question. Will a 0.25% reduction really influence any spending decisions or is it just psychological?

Last night the foreign markets were up. London was up 0.46%, Paris up 0.61% and Frankfurt up 0.44%. China was down 0.03%, Japan up 1.80% and Hang Sang up 0.50%.

The Dow should open moderately higher on continued positive monetary policy sentiments The 10-year is up 3/32 to yield 2.12%.

 

The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. 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. The material provided in Daily Market Commentaries or on this website should be used for informational purposes only and in no way should be relied upon for financial advice. Please be sure to consult your own financial advisor when making decisions regarding your financial management. Members of FINRA and SIPC, Capitol Securities Management is a privately owned full-service retail brokerage and investment advisory firm headquartered in Richmond, Virginia. For nearly 30 years, we have been serving the needs of our investors. Today, more than 200 Capitol Securities Management investment professionals and support staff serve approximately 18,000 customer accounts from Southern Florida to the New England coast.
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