It’s the holiday season. The economy is the best its been in over a decade. So what’s got the stock market so down?
To make a holiday cocktail as strong as our current volatility, you’d need several key ingredients.
The bartender would add two shots of Federal Reserve — way more than needed. A shot of China trade. A few splashes of oil and a dash of expected economic moderation. You garnish that tall glass with Twitter and the media crowd ramping up the political negativity with faux economic “expertise.”
That’s a too strong and bitter holiday nog.
Falling oil prices historically have been a sign of global weakness. The difference now is that America is a net exporter of oil; it had not been before.
The China tariff tiff is a failure to communicate effectively. The news was clearly good coming out of the G-20, but that message was garbled in every way possible.
Solid communications could have spared 800 points on the Dow Jones index.
Coming off the tariff tiff, the markets faced Huawei Technologies CFO Meng Wanzhou being arrested in Canada at the request of the United States on money-laundering charges. She had been “flagged” by HSBC for violating Iran sanctions. The flap depressed the Dow by over 700 points.
Well, those negatively pre-disposed commentators couldn’t cut the White House any slack for standing up to China and making a better deal for America, so they subtly piled on, pretending to be analytical and talking about an upcoming recession.
But on Thursday the Fed — — was leaning toward raising rates in December and then taking a “wait and see” posture (something I suggested Oct. 27). And markets rallied on the news. On Friday Peter Navarro, White House Director of Trade and Industrial Policy, came out with unneeded his own China trade comments that send stocks down to close out a bad week.
Remember, holiday cocktails are something to be enjoyed in moderation. But, in the case of the noxious rumor-and-panic potion, abstinence is the way to go.