Risk is On, Wall Street is Buying and Hedging

Risk is On, Wall Street is Buying and Hedging


FLASH: From near-certainty on interest-rate cuts to signs of peace in President Trump’s trade war, investors see the makings of an solid upswing in here.

For now, many Wall Street traders see good reason to be Bullish as The Trump Tariff reprieve on Mexico boosts global stocks and drove emerging-market shares toward their biggest increase since January.

The Big Q: Why?

The Big A: Wall Street’s buying the Dip and front-running monetary stimulus have proved good strategies to outperform post crisis.

But some investors are edgy, as they have been during this entire year’s rally, and even the most Bullish money managers are hedging their bets, wondering if the Fed will turn hawkish like is did in December.

Just today President Trump criticized Fed policies as “destructive” for not lowering interest rates back then accusing the Fed of undercutting his efforts to boost economic growth.

The President Tweeted that the Fed should cut its Key overnight lending rate by 1 full percentage point and renew the QE (quantitative easing) program that saw it pump trillions of dollars into the economy in response to the 2007-2009 financial crisis and recession.

The Fed raised rates 4X last year, lifting its policy rate to a range of 2.25 to 2.50%. After its last rate hike in December, the Fed faced particularly sharp criticism from President Trump.

“It’s more than just Jay Powell, we have people on the Fed that really weren’t, they’re not my people. But they certainly didn’t listen to me because they made a big mistake: They raised interest rates far too fast,” President Trump told reporters Monday, “That is Number 1.”

Expectations of monetary easing were fanned by Friday’s US report that showed hiring and wage gains cooling in May and downward revisions to payrolls. Then came President Trump’s move to call off punitive tariff plans on goods from Mexico, spurring Monday’s global equity rally.

Monday, the major US stock market indexes finished at: DJIA+78.74 at 26062.68, NAS Comp +81.07 at 7823.15, S&P 500 +13.39 at 2886.73

Volume: Trade on the NYSE came in at 741-M/shares exchanged.

  • NAS Comp +17.9% YTD
  • S&P 500 +15.2% YTD
  • Russell 2000 +13.0% YTD
  • DJIA +11.7% YTD

HeffX-LTN’s overall technical outlook for the major US stock market indexes is Bullish in here.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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