Trump is demanding the Federal Reserve lower rates. However, Fed Reserve Chair Jay Powell – is having none of it (and nor should he). This is setting up another showdown between the President and the world’s top central banker… a repeat of what we saw in 2018. As we all know Trump is a real-estate guy. Property is a business that relies heavily on cheap money. And this is the same lens Trump is taking with respect to his growth agenda. But he may not get what he wants…
S&P500
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Are We Closer to a Market Bottom?
It’s very difficult to know if we’re at or close to a market bottom. They rarely occur over the space of weeks – it generally takes months. But I cannot predict when (or what) the bottom will be. However, I think the ~20% correction from the market high (6147) to the low (4834) tells me a large portion of the selling is behind us. For example, we’re now starting to see equity exposure significantly reduced and cash levels raised. This is a good sign… as there are a lot less people to sell.
‘Trump Dump’ Offers Opportunity
It’s official… the stock market is now ‘on sale’. Panic selling has set in with the VIX trading above 45 – something we have only seen 7 times over the past 25 years. For those who resisted chasing extreme valuations the past 12 months – your patience has been rewarded. Valuations have come down. In turn, the longer-term risk reward is now more attractive than what it was only a couple of months ago. But these are rare times. For e.g., it was the only third time this decade that the S&P 500 shed more than 10% in two days.