U.S. Markets Struggle Under the Weight of Uncertainties


Today, many analysts are describing U.S. markets as in “free fall.”

In the Syria region, the Kurds are wondering why America doesn’t have their back.

In America, people are wondering why it was so important to rush storied veteran James Mattis out the door prior to the beginning of the new year.

Other reports on presidential emotions, markets, immigration operations, federal interest rate hikes and much more are painting a somewhat grim picture for American investors.

The S&P 500 sits down around $2350, which means it’s down over the month, over the week and over a longer term.

The Dow Jones industrial average has sunk more than a few percentage points in the last week and is now down year-over-year, erasing all of its gains since October 2017.

Simply put, the markets do not like instability, and we’ve got that in spades this week.

After all, the government is now partially shut down, and a key executive staffer often described as “the last adult in the room” has left that part of Washington D.C. for sunnier climes.

“Experts say the economy remains strong, a reminder that Wall Street and Main Street aren’t always aligned,” writes Michael Diamond of Asbury Park Press today. “But they still are trying to grasp the impact of the Federal Reserve Board’s decision last week to increase interest rates and President Donald Trump’s herky-jerky policies that have sown confusion. “

Of course, down cycles always build on themselves – there’s talk of investors taking more money out of traditional markets and into new experimental sectors. But there’s also the political winds that move money everywhere and sometimes  seem to scatter it like a hurricane.

Then there were the ill-timed actions of Treasury Secretary Steve Mnuchin.

“Mnuchin may have helped spur this week’s selloff after he announced that he had held phone calls with the CEOs of the U.S.’s biggest banks to discuss if they carried adequate liquidity for their operations,” Sunny Oh recounts today at MarketWatch.

Last week, we reported on Alan Greenspan describing market activity as a mirror for human nature and markedly not predicting big rallies in coming weeks.

Absent a Christmas miracle, many analysts are not looking for big rebounds. Instead it’s time to hunker down and put money to work in very practical and targeted ways. Even the prospect of a fire sale isn’t moving many investors to take cash from the sidelines and enter battered markets. At least not yet.

There are big questions about where America is going to go in 2019. What will direct American foreign policy? How will a government shutdown be resolved? To what extent will the executive office be investigated next year? All of these things hang in the balance and the markets are going to follow.