The market continues to sell off in front of the looming FED rate hike in December and while awaiting news on the Chine Trade Talks. Yesterday we retested the lows in October and we seem to be bouncing off those lows today. All indices except the NASDAQ bounced off the October lows which closed below the October lows. Today, while we see this bounce back I can hardly call this a Thanksgiving Rally that we usually see.
There is a lot of uncertainty about the China Trade Talks. As I have said many times that we will experience much volatility/pain in the markets until these talks conclude. This is the unfortunate consequence of trade wars. Make no mistake, China is experiencing the same pain but in spades. China’s GNP has dropped off the edge of a cliff slamming downward while our GDP is still growing.
The scheduled meeting between President Trump and President Xi is only 6 trading days away on November 29th at the G20 summit. The consensus is that both sides want a deal but both sides are sending a lot of mixed signals as to not show their hands to soon in the negotiations. I believe that just the meeting and willingness to keep talking even though no agreements are reached will lift the markets.
I continue to move cautiously and raise cash levels as I started in August. I am currently about 30 % cash in accounts now and may go higher in the coming days. I am convinced that the FED will raise another 0.25% in December what I don’t know is what their outlook will be for next year. I am anxiously awaiting the upcoming FED meeting.
I may give up some upside this year moving more cautiously and conservative in cash but I believe at this time that is the prudent move.
Try not to worry and have a very Happy Thanksgiving!
Your Boring Money Manager,
Mowery Capital Management
We manage risks first
Then we buy quality
And only then do we seek to provide a reasonable return
At the time of this writing:
Dow Jones 24,464.94
S&P 500 2,649.31
Two Year Treasury Yield 2.84%
Five Year Treasury Yield 2.91%
Ten Year Treasury Yield 3.14%
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