More Fed data.
That’s what we’re waiting for today as the Fed will release their Beige Book, which covers the end of the shutdown period and should give us a read on how damaging the shutdown has been to Q1 earnings. As you can see from the chart, the Atlanta Fed’s estimate of growth in Q1 is pretty close to zero while the “consensus” estimate of leading economorons is just under 2% – that’s a pretty wide gap and it’s going to matter A LOT which way that line begins to bend.
For the moment, the markets are hanging onto hope that the US and China have finally worked out their differences and that the Governement won’t shut down again this year and Brexit won’t be a total disaster and, of course, that all those warning signs that have been flashing in the economy are temporary (from our self-inflicted wounds) and we will get back to growth very quickly. Despite my skepticism, that is how we’ve been playing the market as our Member Portfolios are generally bullish – with a few hedges – “just in case“.
I would still be happier if the market made a nice 10-20% correction and stayed down long enough to consolidate for a proper move up but it doesn’t look like the powers that be are willing to let that happen – and that includes China – who went to great lengths to prop up their own markets this week as well.