Data Curbs Fear Of A Recession, But Markets Still Cautious

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Posted: Aug 16, 2019 9:41 AM
Data Curbs Fear Of A Recession, But Markets Still Cautious

Source: AP Photo/Richard Drew

Yesterday, the market continued to gyrate but in a much tighter range than prior sessions. There was a sigh of relief as the Dow and the S&P finished higher, but the NASDAQ slipped under the weight of lower guidance from Cisco (CSCO). Of course, the cloud of uncertainty continues to cast a dark and foreboding shadow, even as economic data curbed fears of a recession.

The rally was decidedly cautious:

  • Real Estate was the big winner (we have a core position in the sector, but we are looking to expand exposure in the model portfolio).
  • Consumer Staples (we have to brush our teeth).
  • Utilities (we have to pay our light bills).

S&P 500 Index

+0.25%

 

Communication Services (XLC)

+0.17%

 

Consumer Discretionary (XLY)

 

-0.17%

Consumer Staples (XLP)

+1.50%

 

Energy (XLE)

 

-0.62%

Financials (XLF)

+0.50%

 

Health Care (XLV)

+0.35%

 

Industrials (XLI)

 

-0.11%

Materials (XLB)

+0.04%

 

Real Estate (XLRE)

+1.40%

 

Technology (XLK)

 

-0.18%

Utilities (XLU)

+1.29%

 

The Market Breadth was not very convincing, however.

NYSE

  • Advancer: 1,567
  • Decliners: 1,385
  • New 52-week highs: 143
  • New 52-week lows: 297
  • Up volume: 1.57 billion
  • Down volume: 2.54 billion

NASDAQ

  • Advancers: 1,310
  • Decliners: 1,800
  • New 52-week highs: 68
  • New 52-week lows: 307
  • Up volume: 976 million
  • Down volume: 1.42 billion

Trade War

While on his way to a campaign event in New Hampshire, President Trump said China is making more positive overtures, including potential agricultural purchases. That would be great news. However, I must say, beneath the tweets and negative scuttlebutt, there were positives from China’s foreign ministry, including the revelation of constant communication between the two leaders.

Foreign Ministry Spokesperson Remarks on August 15, 2019

Q: On August 14, US President Trump said in his tweets that "Of course China wants to make a deal. Let them work humanely with Hong Kong first." He also suggested a possible meeting with the Chinese leader. I wonder what China’s comment is.

A: Hong Kong affairs are entirely China's internal affairs. As we noted, President Trump also said previously that "Hong Kong is a part of China. They'll have to deal with that themselves. They don't need advice." We hope the US side will keep its word.

China holds a consistent and clear position on China-US trade talks. We hope the US can work in concert with China to implement the two Presidents' consensus that was reached in Osaka, and to work out a mutually acceptable solution through equal-footed dialogue and consultation with mutual respect.

Regarding high-level communication, the Chinese and US Presidents have remained in contact with each other via meetings, phone calls and letters.

Portfolio

Communication Services

Consumer Discretionary

Consumer Staples

1

3

1

Energy

Financials

Healthcare

1

1

1

Industrial

Materials

Real Estate

2

3

1

Technology

Utilities

Cash

1

0

5

 

Obviously, the market is still tenuous but Nvidia (NVDA) could bring technology back today.