EUR 8.43 For Business Accounts Only

The Morning Track wall-of-worry-2

- The Morning Track – Wall of Worry? by Bob Savage
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Investors continue to climb the wall of worry. Global equities are back over 1-month highs – erasing the pain of December. Progress on US/China trade talks is the nominal driver. There are, however, plenty of issues blocking a stampede for the bulls. The wall is well understood:
• The US government shutdown reaches day 28 – four weeks – with no clear end in sight.
• UK Brexit Plan B doesn’t seem to include much new material – making Monday a risk for disappointment – as EU seems less inclined to new talks
• China GDP revised lower in 2018 and the outlook for 4Q 2018 is 6.4% consensus with some calls for 6.2%
The risk and reward on the day is about the extension of the S&P500 to 2700 and the climbing of the wall of worry based on China hopes. The set up for the weekend and the rest of the month seems strained and the two charts to consider into a cold and snowy weekend are GBP and the S&P500 with both showing signs of a overextension. The data ahead and real news seem set up to clash with the price reactions. This is how bear market corrections work and how FOMO leads to a collapse.