Panic Is Not A Strategy!

A few quick comments and I'll have something more extensive on what's transpired since we turned the calendar to August next week sometime.

As I'm typing this the markets are set to open lower by about 1% this morning.  Still that's likely going to be nearly 4% higher than where we traded when the market's panicked earlier in the week.  Investors that sold into that route probably have seller's remorse right now.  Look, nobody knows where stocks are going to trade in the next few weeks.  Those that say they do are at a minimum fooling themselves.  The reality, even if you are bearish right now, is that if you had stayed disciplined then you would be selling at higher prices even accounting for today's likely decline.  Panic is not a strategy.

Markets are on average trading about 3% from all time highs assuming we don't trade much lower than today's indicated open.  There's been a lot of volatility this month but not a huge decline to show for all these price swings.

Expect volatility to continue this month.  A lot of people are on vacation and the market's will continue to trade thin through Labor Day.

The markets are right now seemingly held hostage to concerns that the economy is weakening as a precursor towards a recession and the Chinese trade talks.  I still think the probability of a recession next year is low.  I have come around to the view that a trade deal with the Chinese, or at least a meaningful one, is now a low probability event.  In my opinion the political class here in the US now views  the Chinese as more of a strategic competitor than a reliable trading partner.  I think it is now a low probability event that the Chinese will be willing to give up enough for the Trump Administration to come away with a comprehensive deal.  That's not to say we might not see something before next year's elections.  We may, for example, see something on agricultural products.  But it won't be in the Chinese strategic advantage to give up on technology transfers or limiting access by US companies to Chinese markets.  The world is going through a period of adjustment to this new reality.

As I said back early next week.

PS.  The day is young but so far the market has come back to basically breakeven before the first hour of trading is done.  So all those numbers I quoted above now look even better!  Again though, the day is young!