Wall St. skids, jolted by Trump's surprise tariff threat on Mexico

It was another enormous rout today, once again disproving the theory stated earlier this week that the short holiday weeks tend to be slow. But one day after President Trump threatened Mexico with a 5% tariff, trade war fears and fears of recession increased by leaps and bounds sending investors for the third day to safe T-bills and continuing to deeply invert the yield curve between the 3-month and 10-year bonds.  For the month, the Dow is down nearly 6.7%, the S&P nearly 6.6, the Nasdaq just over 7.9 percent. Adding to the mix was today’s China threat to produce a hit-list of “unreliable” foreign firms.  Today alone the Dow is down another 354 points with above average volume of just over 7.7 billion. 

Wall St. steadies after sell-off, but gains muted

For a little while there it looked like the market might come back today. But then Trump said something about trade and the Chinese said something else about trade and the whole cycle of confusion and murky information sent the index up and down all day long, down as much as 60, up as much as 90, but finally closing 43 up.  The lack of clarity has sent the three major indexes down a good 5% in May and today’s report that inflation was much weaker than previously thought  due to a sharp slowdown in demand didn’t help.  For the second day there was a flight into T-bills and, for the second day, the yield curve remained inverted.  Volume was back to below average at just over 6.2 billion. 

U.S. stocks fall as trade concerns spark growth fears

Yesterday the pundits said that trading would be light this week due to the short holiday but already on the 2^nd day that was proven false as investors flew to safe haven government bonds in the continued panic over the trade war. Tensions were further exacerbated today when, in response to Trump’s comments yesterday, China reacted with the threat of withholding major chemical resources that are used by all industries.  The increasingly heated rhetoric just reinforced fears of slowing growth and recession.  As the market fled into T-bills that pesky inversion reasserted itself, at least for the day. The Dow dropped 221 points, its second consecutive 3-digit loss, on above average volume of 7.3 billion. 

Wall St. loses early gains as trade concerns abound

On Monday Trump made the statement that he was not yet ready to deal with China and that solidified the message that this trade war was far from over and may lead to a global economic slowdown.  The market actually opened this morning over 130 points up but immediately began a decline that lasted all day to close 237 down.  It also did not help sentiment today that the strong consumer confidence numbers from last week are now said to have been gauged before the impact of the trade standoff began, thus pushing investors into greater uncertainty.  The S&P is now down nearly 5 percent from its April high and the trade-sensitive tech sector has lost over 7 percent in May.  Because of the short week, volume is expected to be light all week and today came in at just under 6.7 billion. 

Succinct Summation of Week’s Events 5.24.19 (plus Equity vs. Fixed Income: Return Patterns Since 1802)

As we close out another Memorial Day weekend, I submit the usual weekly summation, with the biggest positive being, "All things considered, this week could have been much worse than it was ... That resiliency is the biggest positive no one is talking about."  The bonus to end this holiday is another quite interesting study from the AAII which, though it states the obvious that, in the long run, equities beat fixed income every time, I'm not sure if we've ever before seen a study that takes us all the way back to 1802 to make its point.  It is really quite fascinating looking at the trends over two full centuries and seeing how relatively consistent they have been. 

The Best Advice You’ve Ever Received (and Are Willing to Pass On)

For this Sunday evening on this holiday weekend, I thought I'd pass along this entertaining and instructive compendium of tidbits on how to enjoy a good life, a good career, a good family.  There are a couple of dozen sage pearls of wisdom here that are a quick read and may actually prove useful.  Enjoy the holiday tomorrow. 

AAII: Are the Nifty 50 Still Nifty?

Since my previous post last weekend was about the AAII evaluating the 50 stocks from the 1960s and 70s that were considered gold, I thought it only appropriate to include their follow-up article to evaluate whether these same companies remain great bets 50 years later.  It appears that 29 of them may well be.  Hope everyone is enjoying the holiday weekend.