The Media Missed the Meaning of Last Week's Market Decline

Excerpt from Louis Navellier's Marketmail - 12/11/2018

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Essentially the stock market likes to “react” first and “think” second. For example, last Monday, the market liked the trade truce with China, but on Tuesday, the financial media said investors had second thoughts about the trade spat with China and triggered a market selloff. But I think they missed what really happened. The catalyst for Tuesday’s market selloff came from Europe. First, British Prime Minister Theresa May suffered a humiliating defeat in the House of Commons and is expected to be similarly rejected by Parliament, so Britain may be getting a new Prime Minister due to the Brexit mess. Second, the worst protests in Paris in 50 years – over an increase in the tax on diesel in a carbon tax revolt – resulted in French President Emmanuel Macron doing a rare about face, postponing higher diesel taxes. 

Both Italy and Germany suffered negative GDP growth in the third quarter. Italian unemployment surged by 139,000 in the past two months and its unemployment has reached 10.6%, up from 10.1% two months ago. So, not only is the British pound weak, but the euro has also been weak, triggering more capital flight into the U.S. dollar, which in turn is pushing U.S. Treasury yields down. These events on Tuesday triggered a “flight to quality” that caused the 10-year Treasury bond yield to finally collapse below the 3% level. Here are the links to my Tuesday and Thursday podcasts explaining last week’s market events.

In This Issue of Marketmail (Click Here to Read)

Bryan Perry writes about the manipulation of this market going on in the “Algo” shops, the silence of the SEC and the possibility that the Uptick Rule could help police the manipulators. He also urges the Fed to do “nothing” next week. Gary Alexander overlooks the current market malaise to address the widespread denial of the good news in global wealth and health – ignored by almost everyone. He’ll give a test to see how well you know some of these facts. Ivan Martchev covers two felonious events uncovered last week to see if they might have an impact on the market to match “real” economic news, like recessions. Jason Bodner looks beneath the red paint in the sector snapshots to see unusual institutional buying eclipsing selling, an advance sign of a market recovery. I’ll cover some of the same territory in my closing remarks: The disconnect between good news and market panics, and the importance of next week’s Fed meeting.

Income Mail:  

Fighting the Fed and the “Algo” Shops

     By Bryan Perry

History is Not on the Side of the Fed


Growth Mail:  

Let’s Address “Global Wealth & Health Denial” in 2019

     By Gary Alexander

The Correct Test Answers: See How You Scored


Global Mail:

Two Felonies as Economic Events 

     By Ivan Martchev

The Huawei-Cohen 1-2 Punch


Sector Spotlight:

Unusual Institutional Buying is Now Outpacing Selling

     By Jason Bodner

Another Sea of Red Hit Most Sectors Last Week


A Look Ahead:

Why the Great Disconnect Between Good News & Market Panics?

     By Louis Navellier

All Eyes Are Now on the Fed