Week Ending 6/28/2019


  • US stocks were down, and international stocks rise.
  • Stocks wrap up the best half-year since 1997 and the best June since 1955.
  • Trump and Jinping declare a cease-fire on trade.
  • Falling GDP estimates.


Stocks fell by 0.40% for the week but wrapped up the half-year with a walloping 18.8% gain. It was the best first-half performance since 1997. It was also the best June since 1955, +7.08%. Stocks managed gains so far despite softening economic data around the globe and increased threats of a heightened trade war. Interest rates have plummeted, the 10-year bond closed the quarter at an even 2.0%, down from 2.69% at the start of the year. And the 3-month / 10-year treasury curve remains inverted, at 12 basis points, the most since the inversion started. But none of that mattered as stocks continued higher with a lot of help due to dovish sentiment from central banks and over $13 trillion in global debt yielding less than zero.

For the week, international stocks gained 0.40%, bonds were up by 0.21%, the dollar was flat, and oil increased by 1.81%.


On Saturday, after the trading week ended, President Trump and Chinese President Xi Jinping agreed to hold off on additional tariffs on Chinese goods. China agreed to buy large amounts of American farm products. Trump also agreed to remove some limits on Huawei Technologies buying equipment from the US.


While stocks are in rally mode, the economy is not. The US clocked first-quarter GDP growth at 3.1%, but the Atlanta Fed’s GDPNow growth estimate for Q2 is only 1.5%, and the NY Fed’s Nowcast is coming in at 1.3%. The Nowcast estimate for Q3 is 1.20%.


Week Ending 6/21/2019


  • A new record high for stocks.
  • Trump and Jinping to meet at the G20.
  • Powell signals interest rate cuts to come soon.
  • Iran shoots down a US drone as oil explodes higher.
  • IPO mania continues.
  • Gold seems to be breaking higher.


Stocks in the US jumped higher by 2.08% and international equities were up by 1.86%.  US stocks closed at a record high. Bonds were up by 0.50% on lower interest rates, and oil exploded up by 8.83% on increased tensions between Iran and the US.

Stocks were helped by two pieces of news. First, on Tuesday, markets had a big rally when it was announced that Trump and Chinese President Xi Jinping have agreed to meet at the Group of 20 in Japan next week.

Then on Wednesday, the Fed held rates steady but hinted that they would cut interest rates soon. Fed Chairman Jay Powell said, “The case for [a] somewhat more accommodative policy has strengthened.” Powell cited a downturn in global economic indicators and increasing trade tensions as heightened risks. The Fed commentary pushed interest rates even lower, and as interest rates fall, the attractiveness of equities increased, moving stocks higher. The 10-year treasury fell to its lowest level since 2016, touching below 2% before ending the week at a 2.07% yield. Markets now expect up to three 1/4% cuts between now and year-end.

IPO mania continued this week. Slack went public and was up 50% from its opening price estimate.


Oil prices exploded higher as tensions between the US and Iran increased. Iran shot down a US drone on Thursday. And then Trump called off a US retaliatory attack at the last minute. The US is sending 1,000 more troops to the Mideast and Iran said that its nuclear enrichment efforts would soon be in excess of the nuclear accord limits.


A lower US dollar, monetary policy run wild, out of control deficits, possible war with Iran, is enough to finally have pushed gold out of its multiyear slumber, and the metal might finally be breaking higher.


Week Ending 6/14/2019


  • Stocks in the US were up by 0.57%
  • A strong retail sales report.
  • Executive confidence is declining.
  • Industrial production was up in May but still down from December.
  • Another hit to free markets as NY implements strong rent control legislation.


Stocks rose in the US by 0.57% and dropped by 0.52% around the world. Equities were helped by successful initial public offerings. Chewy, an internet-based pet-product retailer jumped 59% in their debut. The trade war is still on investors minds, Broadcom reduced its sales estimate by $2 billion this year because of that.

US stocks are hovering around the May 16 price level, which was the last interim high. The VTI has failed to close above that level for five consecutive days (see the orange line below).


Retail sales increased in May by 0.5% with broad-based gains. April sales were revised up to +0.3% from an initial report of a 0.2% decline. The strong report will give the Fed some pause before cutting interest rates. Real personal consumption expenditures (PCE) are increasing at a 3.9% annual pace this quarter. PCE accounts for more than two-thirds of the economy.


The Business Roundtable reported that chief executives confidence in the economy fell to the lowest level since Q4 of 2016. And a survey of CFOs from Duke University showed that 69% expect a recession will have begun by the end of 2020.


Industrial production was up by 0.4% in May after dropping by 0.4% in April. Year over year, industrial production was 2% higher but it is 1.5% lower than the December level.


In another blow for free markets, New York passed rent control legislation that would impact almost one million rent-regulated apartments in New York City or about 40% of the city’s rental inventory. The legislation allows other municipalities to adopt similar regulations. The legislation was more aggressive than real estate industry groups expected and will likely lead to deterioration of apartments over time. Instead, the legislature should have focused on making it easier to develop new housing.


Week Ending 6/7/2019


Stocks around the world went into a strong rally during the week. US stocks had their best day in five months on Tuesday after Federal Reserve officials discussed possibly lowering interest rates. The Dow advanced by 512 points or 2.1%. The S&P 500 matched the 2.1% increase and the NASDAQ surged by 2.6%. St. Louis President James Bullard said that a lowering of rates “may be warranted.” Fed Chair Powell said, “We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion.” Things got better from there as the market moved up each day. For the week, the US stocks were up by 4.34% and international stocks by 2.78%. Bonds also increased by 0.12%.


Late on Friday the US and Mexico reached a deal on immigration to avoid Trump’s threat of new tariffs.


Nonfarm payrolls were up by 75,000, falling way short of the estimate of 175,000. The much lower than expected number helped raise expectations that the Fed would be more to apt to cut interest rates in the near future, thereby helping to move stocks higher. However, other gauges of the labor market are still strong, including initial claims for unemployment, a historically low unemployment rate (3.6%), higher average hourly earnings (+3.1%), and a steady average workweek (34.4 hours)


The World Bank lowered its growth forecast to 2.6% from 2.9% in January. The estimate for growth in trade fell to 2.6% from 3.6%. “There’s been a tumble in business confidence, a deepening slowdown in global trade, and sluggish investment in emerging and developing economies,” said World Bank President David Malpass. The lower forecasts are directly related to trade conflicts.


Week Ending 5/31/2019


  • Stocks are down by 2.69% in the US and 1.12% outside the US.
  • The technical damage begins to add up.
  • More trade war threats with China and now Trump adds tariffs to Mexico and threatens more.
  • The 3 month/10-year curve is still inverted.
  • There are multiple efforts around the world for trading systems that do not rely on the US dollar.


It was another rough week as US stocks tumbled by 2.69% and international stocks fell by 1.12%. Bonds were up by 0.9%. Trade war fears and the impact on businesses and the economy continue to hurt stocks (read below). The technical damage to stocks is starting to add up. The VTI fell below resistance (see 1-3-5-9 below) and the price is under the 200-day moving average. The 50-day moving average is now on a downward slope.


Trade war fears continue to rattle the markets. Threats fly back and forth. Chinese media reported that China would consider cutting exports of rare-earth metals that are necessary for some advanced electronic products. China said it would not accept any deal that harms sovereignty and dignity. On Friday, Trump said he would begin implementing a 5% tariff on imports from Mexico, that would increase from there if there is no progress on illegal immigrants passing through Mexico on the way to the US.

Since Trump increased tariffs on China in early May, the market has fallen by x%, resulting in a decline of about $5 trillion dollars in US equities. In the last 30 days, Trump has put in place or threatened, tariffs amounting to almost $200 billion in increased costs on US businesses. That would be enough to cancel out the value of the tax cuts. But worse than that, the tariffs will disrupt supply chains, make businesses more inefficient, lower business certainty and confidence, increase unemployment,  lower profits, and reduce the perception of the United States as a reliable trade partner, among other things. In other words, bad things will happen. And as the tariffs ramp up, and the longer they last, the more damage.

Considering that the US economy was not that strong to start, a tariff war being fought on multiple fronts increases the odds of a recession in the next year or so. Trump may not realize it, but he lowers the chances for his reelection with these foolish policies.


The 10-year yield has fallen to the lowest level since September of 2017 and yields less than the 3-month treasury bill. All recent recessions have been preceded by an inverted yield curve.


The Trump administrations constant use of economically isolating individuals, companies, and countries around the world are increasing the calls for an alternative system that does not rely on the US dollar. Europe, China, and Russia are working on their own bank-transfer systems, and others are also in the works. The net result is that over time the power of the dollar could fade.