There is always one at the party that talks about their foot fungus and starts a wave of negativity… Debbie Downer visited the Bull Market Party last week!
Optimism
The week started out with great optimism. Things appeared to go well at the G20 dinner, for example, between President Trump and President Xi Jinping. Markets rallied on the news and it looked like months of trade concerns were finally going to start being resolved.
No… not so fast.
Larry Kudlow, AKA Debbie Downer #1, made sure we all knew the progress made at the G20 was not as rosy as portrayed. Tuesday’s market meltdown followed suit.
A pause.
Wednesday markets were closed in observance of the passing of Former President George HW Bush. Often this would be a good break for markets after a day like Tuesday. Rather, it was just enough time for the CFO of Huawei to be arrested for violations of Iran sanctions. While unrelated to trade, fears mounted that whatever progress was made the prior weekend was likely dismantled. Welcome to the party, Debbie Downer #2.
Then JOBS!
The jobs report can save us on Friday, right? No! The economy added fewer jobs in November than expected. This caused investors to become further concerned regarding an economic slowdown. Lastly, markets surrendered earlier gains from good news on the oil markets, and so you have it–Debbie Downer #3…
Conclusion
In all, the S&P 500 shed 127 points or 4.55%. Not all hope is lost, even if the Debbie Downers are controlling the trading floor right now:
1) Trade communication has been re-opened and that is more than we could say a week ago.
2) It is in the best interest of all involved that the Huawei situation should be handled as a separate matter.
3) The job market cooling off is a good thing at this point. Job creation has to slow when unemployment is at 3.7%. It should not keep up its gains of over 200K jobs a month. If it did, the Federal Reserve Bank would likely have to keep their foot on the rate hike pedal!
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