E Market Briefing For Monday, August 21


With Bannon out questions remain whether his departure will mollify the opposition, repair political damage to the administration and restore the market’s confidence in promised legislation.  I’m sure to the hard-core obstructionists this will mean little. They will point a bit to the comparable views of both Bannon and Trump (we think that’s more limited; but again it’s what the perception will be that matters to markets). At the same time I have contended those arguing this market is about earnings, or much other than Trump’s prospects for success, were and are incorrect. 

So some say there was a ‘Cohn premium’ and ‘Bannon discount’ in markets; and a ridiculous assumption that #war from Breitbart meant political chaos. Of course you may get more turmoil (almost ensured even if a retreat or tiny contrition move comes from the President); but it won’t be from the hashtag of Breitbart; which always uses that tag. Again media made more of it than it was; which is not to endorse anything or everything they say but just noting a tendency to grab on anything that can be spun as more controversial. 

Speaking of ‘center’; this is not where the stock market is. We had a topping formation unfold for a long time; with a huge number of stocks swinging with patterns well below their 200-day Moving Averages. Technically, everything for the most part supports my view that the internal rotating top began from March 1 forward; and has nothing to do with the small universe of stocks that did the heavy lifting during the late upside phases that masked a broad distribution that has been ongoing for months.  

The market has shown that in the last couple weeks, and now again, in both directions. Ideas that the new Chief of Staff Kelly, or others, might help the White House start to better pass the ‘smell test’ does matter and has been in my view clear for awhile. To wit: anything that derails the President’s core economic agenda is worrisome for business and markets; whereas anything that stabilizes prospects of key elements of that agenda coming to fruition in the months ahead, helps to maintain the optimism looking forward. 

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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