by John Galt August 18, 2019 22:00 ET
President Donald Regalus Postulus Magnanimous Renaldo Trumpus hereby declares that while the Congress is in recess, the American Stock Markets shall no longer be allowed wild swings or dramatic declines until after September 5, 2019.
Or something like that.
As one of my favorite economists said this past Friday:
The White House is now delaying the tariffs and removing some items. Did some acronym called the SPX cause someone to blink?
— David Rosenberg (@EconguyRosie) August 13, 2019
So what has happened and what is happening with American equity markets this upcoming week?
It will be boring, barring a Chinese invasion of Hong Kong;Or a slip up by Jay Powell in Mooseland. Or a Presidential Tweet declaring war on Outer Mongolia.
Hot, humid, sweaty (at least here in Florida) and oh, by the way, BORING.
Look for a low volume rally of the declines in the S&P 500 this week:
While this low volume rally I expect the next weeks will take the S&P 500 back up to the 2940ish level, maybe above it, after that, look for strong selling into each rally until after Labor Day.
The faith in the Trump economic plan is fading fast and the reality of a service and manufacturing slow down is beginning to be felt by Main Street small to medium sized business thanks to the Smoot-Hawley-Trump tariff program.
Gold should correct into the $1450-$1480 level at a minimum but that should be the last buying opportunity to buy into not only the physical, but miners at bargain prices. We are about to witness a period of 4 months of intense financial disruption all thanks to incompetent political and economic leadership after Labor Day as the real market movers are going on vacation very, very soon.
Buckle up after September 4th, it’s going to be a bumpy ride.