US Economy Strong, Growing, as Financial Markets Consolidate Big Gains

US Economy Strong, Growing, as Financial Markets Consolidate Big Gains

US Economy Strong, Growing, as Financial Markets Consolidate Big Gains

$VXX

The nation’s economy is very strong, and the tax cut bill is energizing business, so the stock markets will be just fine despite the quick correction seen over the past 9 trading days.

Savvy participants are cost averaging down and “buying the dip’

“Investment profits are very strong,” economist Larry Kudlow said in an interview Friday.

 There is some interest rate turbulence in here, he continued, but “…people shouldn’t panic. I am a buyer of stocks in here.”

“I buy them and hold stocks for the long run, that’s always been my philosophy,” said Mr. Kudlow, who served as The Trump Campaign’s senior economic adviser.

Many of the trading algorithmic and leveraged instrument changes that have occurred are driven by computers, not humans, Mr. Kudlow also said Friday.

The CBOE Volatility Index (VIX), referred to as the “fear index” spiked to 50.24 triggering a lot of programmed selling.

Notably, for most of this Bull Market run since 8 November 2016, the VIX was at 30 year lows in the low teens.

“That’s what happened today. It’s not humans. It is computers. It’s the world in which we live. These things happen,” Mr. Kudlow said.

Ironically, good news for the economy can also be bad news for the stock market.

“Real interest rates go up, investment returns are rising in the economy, so the stock market requires a higher real investment rate,” he said. “It is the fear of inflation, that spooked the stock market,” said Mr. Kuldow.

But, no inflation, no growth.

Mr. Kudlow said he also agrees with the President’s call for more defense and military spending, but it is disappointing that the new spending bill did not include cuts to domestic spending.

“The Democrats insisted that whatever we spent on military had to be also spent on domestic,” he said.

“It is a lousy deal. I think there’s a lot of reforms that need to be done. I do not think it is a catastrophe but I think you’ve got to have a stronger budget outlook.”

Symbol Last Trade Date Change Open High Low Volume
NYSEArca:VXX 50.03 9 February 2018 -5.21 50.55 56.5 48.61 75,025,100
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bullish (0.25) Neutral (0.17) Bullish (0.32) Bullish (0.26)

Have a terrific week.

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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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