Today was a roller coaster ride for the markets. The Dow finished about 50 points lower, clinching its longest losing streak in 6 years. Though a great headline, this doesn’t mean much in of itself. Here’s what we know…
$1 Markets unwound many pro-Trump trades leading into today’s session, with the Dow opening 150 points down but recovering throughout the day. The biggest decline from post-election highs has been banking/financials, which is a reaction to a huge loss to Trump’s campaign agenda (health care) as well as the Fed rate hikes 12 days ago. As stated before, rate hikes are good for banks in the long-term, but there is some risk of pullback in the short-term. We are seeing the latter today.
$2 Oil continues its weakness amid U.S. reports of higher rig counts and lack of discipline from OPEC countries who previously vowed to cut production (looking at you, Saudi Arabia). Downward pressure on such an important global commodity sends chills throughout the marketplace, and oil producers are especially negative right now.
$3 Markets overall continue to show signs of protracted correction. If I am right here, we should see continued volatility and overall declines in asset prices generally across the board. Hedge with gold or volatility ETFs if necessary, otherwise buy more of your quality companies as they become cheaper.
That’s all for now.