Equities struggled to find direction as the market ponders the path of rate cuts. Moreover, third quarter earnings season commences in about two weeks and there are some concerns that estimates may be too lofty. As noted many times, about 90% of trading is done via technology, utilizing algorithms that are primarily based off of momentum and headlines.
The market is devoid of liquidity, defined as the ability to buy or sell a security without affecting the price. Market clearing mechanisms are greatly reduced because of regulatory fiat.
Most will accept the markets are overextended and consolidation could occur.
The yield curve continued to steepen as longer dated Treasuries continued their selloff.
Markets ignored the escalating tensions in the Middle East as Isreal and Iranian backed Hezbollah are at the brink of all-out war. Is this complacency misplaced?
What will happen today?
Last night the foreign markets were up. London was up 0.18%, Paris up 1.55% and Frankfurt up 1.16%. China was up 3.61%, Japan up 2.79% and Hang Seng up 4.16%.
Dow and NASDAQ futures are up 0.5% and 1.5%, respectively as MU surged on a strong revenue forecast. and China’s Politburo “Supercharges” stimulus with housing and rate vows. The 10-year is up 4/32 to yield 3.77%. Markets are now suggesting another 50 bps reduction in November based upon lackluster consumer data released earlier in the week.
Kent Engelke
Chief Economic Strategist Managing Director
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.
