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Monday Market Momentum – Still Movin’ On Up

Nothing seems to matter.

Trump's appearance at the G20 meeting this weekend was universally reviled as one of the worst foreign policy disasters since Chameberlain met with Hitler yet there's no indication of it in the Futures as we seem to be holding Friday's pumped-up, low-volume gains – so far.  

ABC's political editor, Chris Uhlmann delivered a scathing analysis of Donald Trump’s presidency during the G20 summit, accusing him of hastening America’s decline as a global superpower and criticised Trump’s presence at the summit in Hamburg, his leadership and use of Twitter, saying his actions in diminishing America are “the biggest threat to the values of the west."

No one at the event was able to disagree as America lost on every possible point while our former allies did end runs around us to make trade agreements with each other now that Trum is questioning our own long-standing trade deals.  It's been 45 years since Nixon went to China but Trump has pushed American foreign policy back to the stone age in just 6 months, generally to Vladimir Putin's advantage.

Putin, for his part, said he would happily accept President Trump's invitation to form a cyber security task force and get to the bottom of who is hacking the elections.  He also pointed to the reporters who were in the room for a briefing and said "These are the ones who insulted you?" to which Trump replied "These are the ones, you're right about that" and you can see Putin's man to his left making an ominous list (Putin is known for eliminating reporters who displease him). 

This is, of course, right after Trump has retweeted a video of Trump attacking a CNN proxy at a wrestling match and just last month Putin was joking with Czech President Milos Zeman about "liquidating" journalists.  Of course, Putin has mellowed over the years.  In 1995 and 1996, over 50 journalists were killed and only 5 in the last 2 years so either Putin is getting soft or reporters have gotten the message.  Either way, you can see why a budding Despot like Trump would look to Vlad for guidance…

We're still in post-holiday, low-volume mode in the markets and, as you can see from Doug Short's S&P chart, we're still treading water under that 2,440 line while we are still waiting for the Nasdaq to give us some signs of life.  

Janet Yellen will testify to Congress on Wednesday and the Senate on Thursday and the Fed's Beige Book will be released Wednesday.  We have a good amount of data this week with PPI, CPI, Retail Sales, Industrial Production, Capacity Utilization and Business Inventories highlighting a busy week as we catch up from reports that were put off due to the holidays.  

I myself am still on vacation and today is a "no-play" day as we don't have enough volume or data to place new bets (though we did pick a new long on IMAX in our Live Member Chat Room this morning) and we remain a bit bearish but mostly neutral and MOSTLY in CASH!!! while we wait for things to come into better focus.

Most exciting is that it's almost earnings season and next week 21% of the S&P 500 will report.  Q1 was pretty good but Q2 needs to be better as expectations are high and the price of many stocks is at record highs and investors are running out of patience in some cases.

Wages are rising, material costs are rising, prices are not being passed along to consumers so it will take a lot of fancy financial engineering to make Q2 look like Q1 but, so far, the 4% early reporters have been coming in in-line with consensus.  Not much of a sample set – but it's all we have to work on so far.

Be careful out there, 

- Phil

 

Provided courtesy of Phil's Stock World.

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