Confusing Market, Dark Skies Ahead

INNO

Bonds are flat and Dow is down 200 points. Oddly, NASDAQ is up 45 points which is being led by some big tech companies. I do not trust the number overall. I continue to see dark skies coming for the stock market. In the last week, Hertz rental car has announced that they are defaulting on their loan payments and Warren Buffet dumped all of his airline stocks. In the past, both of these actions would have driven the markets down by hundreds of points. The market was up on the day Hertz made their announcement. Throughout May will see many April indicators and at that point the market will better see what is coming. Corporate earnings are already dropping fast and a large part of the first quarter was not yet impacted by the virus. Last week the treasury auctions went very well which is a great sign overall that market conditions are stabalizing. I hope this can continue but i fear the Fed will need to get back in as aggressively as they were a couple of weeks ago. I believe at some point they will begin trying to flatten the yeild curve down close to zero. Until then, bonds continue to be secondary to mortgage pricing with the primary driver being lender health and lenders perception of risk.

Thought for the Day- “I find if I go into a new situation with neither high nor low expectations, my ability to make great decisions is greatly enhanced. Neutrality is empowering. Expectations create attachment or fear depending on the emotion you attach to a situation.”

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