$DIA, $SPY, $QQQ, $RUTX, $VXX
FLASH: Fed Chairman Jay Powell describes US economy as “good”, saying he does not see an elevated probability of a recession, stocks finish on their highs lead by the Financials
Investors are prepare for the return of the divergence trade, with the US set to lead the rest of the world,as President Trump’s policies prove Strong..
Mohamed El-Erian, chief economic adviser at Allianz SE, said the poor political and fiscal management in Europe mean it’s “likely that growth prospects will to dim further.’’
And, i the wake of political turmoil in Italy, violent street protests in France and sluggish growth in Germany, the European Commission recently slashed forecasts for the region’s economic expansion to 1.3% this year, down from 1.9% projected in November. The single currency bloc is not doing well.
While US activity is expected to slow from 2018’s pace, the Fed still projects a solid 2.3% increase in GDP.
“Would you bet on a team where your major players are all having issues and they arenot playing anywhere near their potential and there is no teamwork? You wouldn’t,’’ said Mr. El-Erian. “That iswhat we’re seeing in Europe because of the politics.’’
Given the outlook, the “obvious relative trade’’ is to Long US stocks Vs the rest of the world. Noting that the spread between 10-year US Treasuries and German bunds to widen out to as much as 270 to 280 bpts, from the current 255 bpts.
Europe is “a lot more” concerning than China is, he concluded. And still facing the Trump Tariffs against the German auto industry.
Tuesday, the major US stock market indexes finished at: DJIA+372.65 at 25425.76, NAS Comp +106.71 at 7414.63, S&P 500+34.93 at 2744.69
Volume: Trade on the NYSE came in at 873-M/shares exchanged
- Russell 2000 +14.1% YTD
- NAS Comp +11.8% YTD
- S&P 500 +9.5% YTD
- DJIA +9.0% YTD
HeffX-LTN’s overall technical analysis of the major US stock market indexes is Neutral to Bullish in here.
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