Will They Meet or Won't They?
Last week on Monday, we recommend that global equity markets were technically oversold and that a great deal of negative fundamental news had been priced in. The bounce came and now we are wondering what’s next?
*Mexican trade tariffs have come and gone (for now) and President Trump has seen what the market thought of his latest tariff attempt.
* The global equity markets corrected the very oversold state it was in and has continued to gain on the agreement with Mexico.
*In addition the Fed came out joining most of the global central banks with a dovish signal.
*A key issue is the upcoming G20 meeting at the end of June and whether President Trump and Chairman Xi Jinping of China will sit down and try to agree to some sort of trade solution.
*We had a disappointing employment report on Friday from the U.S., was it a one off, or the start of a trend?
The Atlanta Fed’s GDPNow forecast is for a 1.4% growth in Q2, While the NY Fed is looking for 1% Q2 growth (be assured, the Fed will be blamed by President Trump)
The markets currently seem to think we are on safe ground and that China and the U.S. will find common ground.
Gold traded at $1345 and has retraced to $1328.
Crude oil has bounced off the recent lows and was up 2.6% last week.
S&P 500 index had its best week of the year, last week.
We now think there is too much feel good on the basis of Mexican tariff threats that were instigated and rescinded in the course of a week.
We suggest that if you traded the long side from early last week , be happy and take off some risk.
We see the next few weeks as range trading as we await the G20 meetings.