I’ve basically said the same…Interest rates (the Fed) & Trade (China) are the key fundamentals needing a Bullish shift before markets can focus on an assault to record highs again.
Fed needs to talk of a pause until conditions heat back up & China needs to find a compromise with Trump before there is a chance for an all clear sign. For now there should be more strong oversold bounces to begin trading range periods, with risk of eventual new lows until conditions mentioned change.
As you know I have talked more about a corrective October with no chance for Buying until election day.
Nothing is preordained, so the outcome matters as I have also said. Both chambers in Dem hands (unlikely) would plunge stocks further in my opinion: split outcome that’s expected will have more muted outcome – trading range; both chambers staying with GOP (modest chance) would send stocks up sharply before re-entering trading range above the recent lows from that point.
A strong 6 month rally? As mentioned before – would need the Fed to acknowledge a slower GDP outlook & lower inflation & pause in rates & have China cave on IP protection & market openness.
On Tue, Oct 30, 2018 at 10:43 AM Brian Sly <Brian@briansly.com> wrote:
Cramer: The only thing that can save the market is Powell changing course or Trump stopping tariffs
- Both Fed Chair Jerome Powell and President Trump need to change course on rates and tariffs, respectively, but “neither is likely,” CNBC’s Jim Cramer says.
- Higher interest rates and trade tariffs are setting us up for a “very difficult end of the year, not to mention 2019,” Cramer predicts.
“My main fear is that we could have a mini version of 2008 if the Fed doesn’t change course,” the “Mad Money” host said Monday night. “If Fed chief Jerome Powell actually starts listening to the stock market and wakes up to the damage that [Trump’s] tariffs can do to the economy, then maybe he’ll shift gears, just like [then-Fed Chairman Alan Greenspan] did in ’98.”
Cramer has been critical of Powell in recent weeks, agreeing with Trump who has been arguing against further rate hikes. The Fed has already hiked rates three times this year, and one more is expected in December. Earlier this month, Powell said rates are a long way from so-called neutral.
If Powell halts his rate hikes then “we can bottom and even roar higher” in the stock market, Cramer said. “But as long as Powell stays committed to the December hike and three more next year … and the president stays committed to expanding his tariffs, then history says we’ve got more downside no matter what.”
Stocks fell late Monday after Bloomberg reported the U.S. is preparing new tariffs against all remaining Chinese imports should talks between President Donald Trump and Chinese President Xi Jinping fail to resolve the nations’ trade dispute.
Both Powell and Trump need to change course but “neither is likely to occur,” Cramer said, adding “higher rates and higher [trade] taxes are setting us up for a very difficult end of the year, not to mention 2019.”
Brian Sly and Company, Inc.