Market Brief — Monday 9/24/18

A new tax in the form of tariffs will be hitting American consumer’s pocketbooks in the near future as both the Trump Administration and China fulfilled their promises to implement another round of tariffs today. Rumors are swirling that the Trump Administration will be moving forward with a larger $267 billion tariff against China. Hopefully cooler heads will prevail before this trade dispute morphs out of control.

Asian and European equities were down and in early trade, U.S. stocks were down slightly as well. Today’s 2-year Treasury auction went out off without a hitch, although foreign bidders have backed off their interest in shorter-term Treasury bonds. Long-term bond yields didn’t react much to today’s auction, but short-sellers did get an early jump on trying to push yields higher.

According to Factset, 76% the of companies that have provided upcoming EPS guidance have provided a negative EPS guidance for the upcoming quarter. Should this percentage hold for all the companies in the S&P 500, it will be the highest number of companies issuing negative EPS guidance since the first quarter of 2016. With the stock market well ahead of earnings, this may not be good news for stock prices.

Stocks closed down slightly, and Treasury yields up slightly for the day. I expect the markets to be rather calm until the Fed’s press conference on Wednesday where they are expected to announce another 0.25% increase in the Federal Funds rate.

Physical gold continues to trade flat, which may be a sign buyers are holding a floor at $1,200/oz. The large gold mining ETF, symbol GDX, continues to run into a wall of sellers at $19. Unless the buyers can break through, it appears prices on the miners are headed lower.

Agricultural commodities were down slightly despite continued reports over the weekend of falling global crop yields and production. In this Friday’s update, I will share with you the real reason agricultural commodities are highly likely to experience a major move to the upside. Be sure to check it out!