Bipolar Wall Street soars Thursday. On exactly what news?
WASHINGTON, June 1, 2017 – It’s almost impossible anymore to chart the stock market’s intent and direction past a 2- to 4-hour time-frame these days. Wednesday, the sky was falling, because oil prices dropped precipitously and because U.S. banks would apparently never generate profits again.
Thursday, all that existential gloom was replaced by brilliant sunshine due to crude oil prices going up by a few cents, based on a large crude oil drawdown that might not be real; a likely overestimated ADP jobs report; and an increasing drumbeat of rumors that President Trump is going to withdraw the United States from the Paris
Global Warming Climate Change Accords.
(UPDATE: Several news sources are reporting that President Trump will indeed withdraw from the Paris Accords tomorrow, keeping one of his most prominent campaign promises. However, he will apparently hold open the possibility of “re-entering” some arrangement based on future negotiations.)
(UPDATE 2: Oops. As of 3 p.m. ET, WTI crude is off again, down 11 cents bbl. on the day, as the fickle finger of Fate moves once again.)
That Paris Accord stuff, in fact, was supposed to have been part of the reason for Wednesday’s rotten Wall Street action. You can’t make this stuff up.
Perhaps the HFTs are just getting back into action, trying to jerk some headline volatility back into markets so they can once again begin screwing funds and individual investors alike by jerking positions around so conservative funds and investors just throw up their hands and bail at any price.
Whatever the case, as we’re writing this article, all three major averages are up sharply by some 0.6 percent, with the Dow and the NASDAQ leading the charge. It makes for a situation where you don’t know when to get into a stock and you don’t know when to get out.
That’s why we’re going to sit back today as much as possible and see if we can dope this whole situation out in a rational way, though the odds may be against us. It’s entirely possible that markets are simply betting on what the Fed will do about interest rates, come the FOMC’s mid-June meeting. Yet every day, we keep seeing news that the economy is sinking again, meaning that the Fed will hold rates steady (unexpectedly, of course); or that the economy is going great guns, so the Fed will ad another 0.25 percent to current rates.
Is this “news” fake or real? At this point, the Fed itself may not know.
Stay tuned. If we can ever figure this economic tangle out, you’ll be the first to know, and we’ll die rich.