August 28, 2019
This is what I've suspected to see him do since he forced the Fed's hand on a rate cut in July. But he hasn't done it, yet. And as time passes, he is losing leverage. He continued by saying, it would be the wrong deal (to concede). He said staying the course, is doing it "the right way," but it will take a little time.
We continue to watch how it unfolds.
In the meantime, the behavior of U.S. stocks sets the tone for global financial markets and global sentiment. And for the moment, hanging around 5% from the highs, the market is relatively stable.
Remember, that
appears thanks to an emergency call Mnuchin and Trump had with the heads for the country's big banks on August 14th – the worst day for stocks since 2019.Let's take a look a the chart to see how stocks have behaved since that call.
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We had a huge bounce, for the days following the call. And stocks have continued to bounce back sharply when testing back below the 2850 level on the S&P futures. When is the last time Mnuchin made an emergency call to the big banks? Christmas Eve of last year. When stocks opened the day after Christmas, the bottom was in.
So, what kind of messaging are we hearing from the banks that are represented on these calls? JP Morgan (the biggest bank in the country) has been putting out bullish stock market notes. On August 19th, JP Morgan said they "don't think the current pullback will extend for longer than the May one did" (which was a 7.6% decline over 23 day — 13 days to fully recover the losses), and they said they think "stocks will make new all-time highs into the first half of 2020." Yesterday, they said the time to buy stocks is approaching and still think the market will advance into year-end. At this point, stocks have fallen 6.8% and have been in drawdown for 23 days.
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