D&D Note (6.23.2020) ~ Futures Market Shocked By Peter Navarro “It’s Over” While Cash Trading Rallies On PMI Data ~
Last night during futures trading we got a massive shock when coming across the newswire that Peter Navarro in a Fox News report said the China trade deal “Is Over.” Immediately global markets took an elevator down 1.5% across equities, commodities, FOREX. Gold went up along with the 10YR Note.
Before investors could even digest the news Peter Navarro walked back the comments saying that Fox News had taken his comments “wildly out of context.” This coupled by a tweet from Trump saying the trade deal was “fully intact” sent markets right back up.
For an investor that was a pretty scary 15-30 minutes during the after hours flash crash.
In cash trading today markets gapped up on the open on news Trump is pushing for a second stimulus check out to Americans. This looks to be a classic buy the rumor event… which sets up a later sell the news event when Congress actually approves the stimulus.
Also boosting the markets today was the latest manufacturing PMI data for the US rebounding to 49.6 in June up from 39.8 in May creating a sharp V. Any reading below 50 means contraction while above 50 means expansion.
While markets continue to gain in June we are coming up against a potentially multi billion dollar selling event at the end of the month during quarter end rebalancing. Estimates are the US corporate pension funds will move between $35 billion to $75 billion out of the stock market taking gains and move that money into fixed income.
DOW up 0.50%
S&P 500 up 0.43% (3131.24)
NASDAQ up 0.74%
VIX down -1.35% to 31.34
Oil down -1.30% to $40.20 a barrel.
Gold up 1.03% to $1784.60 an ounce.
Dr. Fauci testified in from of Congress saying that parts of the US are seeing a ‘disturbing surge’ of Covid-19 infections and warns of ‘more and more’ positive infections and complications in young people. This makes him concerned that there will be an increase in community spread.
This was echoed by VP Mike Pence last night saying that more younger people are testing positive for the virus.
The US 7-day average of Coronavirus cases has surged 30% from a week ago.
Arizona alone has seen a 94% increase in cases from a week ago.
California has had a massive one day jump in cases with 6,219 breaking last Thursday’s previous record of 4,084.
Global Virus cases: 9.15 million+
Global Virus deaths: 473,930+
US Virus cases: 2.32 million+
US Virus deaths: 120,927+
~ Dave James / Principal Trader and Market Strategist