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Pondering a Wild Monday

I’ve been pondering the effect that the announced tariffs will have on markets on Monday. I can’t think of of reason that this will be well received by markets–stocks or bonds. It could be pretty ugly.

Friday afternoon markets were doing just fine but by early afternoon stocks began to fall and interest rates shot higher–I know my accounts which had been mildly green through the morning ended up red for the day. Overall while it was a reversal it was a reversal off of all time highs–so you know there remain plenty of nervous folks out there looking to take a profit–or looking for a reason to take profits.

I would expect the futures markets to open plenty red tonight–we always get a severe reaction in those markets to weekend news. The question is whether they remain negative all night and then tumble hard tomorrow to start trading? Will markets tumble hard and then bounce back up? Will the tariffs remain in place or do we have a quick reversal like we saw with Columbia last week?

I know one thing for certain–I will not be selling regardless of what happens tomorrow. 1st off there is no advantage to selling–markets will trade immediately to a level which would guarantee one locking in a loss. I think one should take a deep breath and then determine whether to simply stand pat and/or look for something to buy–although buying too soon can cause a lot of pain.

Well it is 3 pm (central) so it will be some hours because we see various markets open–and there is not one darned thing I can do before tomorrow so no use worrying about it.

23 thoughts on “Pondering a Wild Monday”

  1. Unless a reconciliation, I would think the real damage is out 3-4 quarters when higher prices is tracked by the fed ( looking backwards as usual) and the FED Powell has no alternative but to raise rates! That’s when the damage really sinks in…Whole new world huh?

  2. The time to raise cash was when Trump announced the Tariffs! This will probably be like a frog in a pot of water with the temperature slowing rising. Hopefully the frog figures what’s going on and jumps out, if not “CROAK”!

  3. It appears the more a person is online the more anxious and paranoid they become in this brave new world. You can read blogs, news, and opinion pieces on these recent topics from the mundane basic “just the facts mam” to the devil has been reincarnated in the form of a specific person we all know who I am referring to. It sure whips up everyone into a frenzy.

    I am not doing anything right now. Ally’s brokerage account is offline for some reason. Fix is on the way according to the website. I should probably get some work done anyway.

  4. Yes the emotiions of the market are extreme. And yet everyone knew the tariffs were coming. It was a basic tenet of the presidential campaign. But to have with predictions the question remains who will the first to give in. Prediction probably Mexico and within weeks. What will the mood of the market after that? Ok gotta go.

    1. Surprised to see relatively little red in my account. I was expecting a major down day. Maybe it has not got going yet?

  5. How about dollar up big and rates down because less deficit to finance = less inflation = lower rates.

    If these tarrifs really were inflationary wouldn’t we expect the opposite? Dollar down, gold up, markets up and rates up?

    Glad I sold BCE last week either way lol.

  6. If there is something you have been eyeing and have the conviction you want it I see no reason to not put in some GTC limit orders way out of the money. As Tim says, there may be a few people in the herd who will sell with a market order just to get out.

    1. Good idea, Charles. Just be sure to get the blessing from the Almighty Fido Goddess of Order Entry for your 50 shares. 🙂

      1. Rocky, Here is a good one for you. You are correct, it is Fido nanny again.
        But this time instead of the dreaded MA0000 warning saying I’m exceeding the maximum average of shares traded I got this.
        (DB0002) This security is restricted from online opening trades or restricted to closing trades only. Please contact a Fidelity representative at 800-544-6666 for more information. For more information regarding variable rate preferred stocks or bonds, please contact a Fidelity Fixed Income Specialist at 800-544-5372.
        Thought I would play the Canadian preferred trade considering they will probably get wacked tomorrow. Nanny knew what I was thinking and blocked me. Do I really want to get up before the market opens to argue with a newbie on something I already own and want to add to?

        1. Oh now it gets even better. Another Canadian preferred that shows a 0-35 share average I put in an order for 250 shares and it went through no problem. This GTC order should have been blocked if you go by the rules Fido Nanny has set up. This was just a test so I will cancel it.

  7. I’m going to be ready to do some Regular-to-Roth retirement account conversions in case we get a decent dip.

  8. This is going to move rates and that will hit the bond market. Definitely not news to sell on in my opinion. If you do, you’re just eating losses. I’m going to look away and see where we land Wednesday and maybe hold my nose and do some buying.

    1. Funny thing, index futures gap down, DXY and crude up, but 30-year t-bond futures almost flat. This at 6:20PM ET.

      1. When markets sell off, the money has to go somewhere. Bonds are one of the logical places.

          1. I wasn’t thinking the 30 year either. Shorter maturities. The 10 year is trading flat at the moment. I prefer Corporates over treasuries myself. If rates spike tomorrow I’ll be looking to add some select corporates. I am buying to hold for the income.

        1. Equity futures sinking further but bond yields (10 year) have also steadily dropped this evening. Not exactly what many have forecasted for yields with the tariff moves. Monday is going to be fun! I’ll have to set an alarm, being in Hawaii, to get up early and follow the action.

          1. Bond traders might be thinking…
            – flight to safety -> price up, yield down, or
            – inflation worry -> price down, yield up
            – something else entirely.

            DXY, the dollar index, is up big tonight to 109.8. Based on recent history, I’d expect long bond yields to rise with DXY.

    2. EM debt will be hit with the dollar rising. But EM debt is, in my mind, in the risk category and unrelated to treasuries or high-quality corporates.

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