“The Smoot-Hawley Tariff Act was like throwing a match into a barn full of hay after the fire had already started.”
— Ben Bernanke
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So, here we are. Ground Zero. The end of an Era? Or just the Art of the Deal?
For those few of you who may have temporarily forgotten about the Smoot-Hawley Tariff act quoted by Bernanke in today’s quote of the day, here’s a quick reminder (click here). And here’s another quick reminder of the effects & critics regarding the act (click here).
But enough of this for now, as the QuiCQ is our daily portal into shorter-term market gyrations …
Yesterday’s equity session was pretty friendly, as we had indicated it may be, due to the typical 401k buying going on in the US on the first day of each quarter.
After the noticeable turnaround on Monday stocks showed follow-through yesterday, not only in absolute terms but also under the hood. Nine out of eleven sectors were up, with three stocks up for every two down. The number of stocks hitting a new 52-week high (19) versus those hitting a new low (20) was pretty balanced, however, the sector concentration of stocks at new lows raises an eyebrow:
Taking a closer look at the list of health care stocks hitting new 52-week lows I note that most names are Biotech names, which would then go to explain the difference in YTD performance between larger Health Care stocks (XLV) and their Biotech cousins (XBI):
To end the equity section, I want to re-highlight a chart I showed a few QuiCQs ago - it shows the trading range the S&P is ‘stuck’ in (5,775 to the upside; 5520 on the lower end). My suggestion was NOT to take any major bet on either side, given the quite binary macro-situation based on future (non)tariffs. This range still holds to the day and my recommendation remains the same:
Maybe something will jerk the index out of this range today?
Asian stocks are criss-crossing between positive and negative territory this morning, like little children anxiously moving their legs below the table in anticipation of Santa Claus coming …
Global bond yields have come down over the past few sessions, with the US 10-year yield back at the lower end of its recent trading range, after having made a ‘fake’ breakout to the upside only a few sessions ago:
Not much going on across other asset classes and time has come to hit the send button - tomorrow we’ll likely have more to talk about …
That’s all for today; signing off with Winston Churchill’s 1942 words seems somehow adequate given the occasion:
“Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”
Time's up, more tomorrow - May the trend be with you!