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The Weekly Track scapegoats

- The Weekly Track – Scapegoats by Bob Savage
/articles/the-weekly-track-scapegoats/

A scapegoat is an animal ritualistically blamed for the sins of others, then driven away, cast into the desert, to carry away the evils of the entire community. In order to go from fear back to greed, markets will have to find a scapegoat, something to blame for the last week’s turbulence and anxiety, define its community, and then find somewhere to cast that negative energy other than emerging markets or bonds. There is no one cause for the selling of risk-assets last week suggesting we maybe looking for a flock of them. Some blame the FOMC rate hike and future path for more of such. President Trump likes this argument. Others blame the President and his China tariffs as the trade war becomes more a cold war with expectations that this may take years not months to resolve. China itself was blamed as well, even as its trade report showed little effects yet, but a report that China was cracking down on traveling citizens bringing undeclared designer handbags and other go
ods into the country – being an example of the tit-for-tat battles spooked markets. Others point to the IMF meetings and the WEO warnings on global growth with higher rates and protectionism highlighted. Finally, some blame the 3Q earnings ahead with outlooks for 2019 very much in doubt even as profits now are expected to remain strong as many see this the best of times. The key US headline stories beyond the political noise of trade came with the US CPI and University of Michigan consumer sentiment reports. Markets are a confidence game and many see the fall in the S&P500 as a warning signal for growth into 2019 while others see it as a buying opportunity. So turning the tide of sentiment in markets and in the economy requires an event, or more facts like a benign CPI report, or just less selling like Friday’s bounce. The obvious cure for bear markets is time, and perhaps, it’s like the magic Lo Shu Square found on the back of a turtle, after a flood of selling, wait
15 days. So shoot for the end of the month and look for the return of a bull market or prepare for the US mid-term elections and the larger pull down of political worry.