“The Vicious Cycle” was the heading for the final paragraphs of our post on August 1. It was written on the eve of the double whammy the market took from dual announcements by Fed Chairman Powell and President Trump. The former surprised observers by describing the Fed’s 25-basis-point cut to the discount rate as a technical “mid-cycle adjustment.” The latter dramatically escalated the trade war with China by tweeting out a planned 10% tariff on consumer goods by September 1. Based on the knee-jerk reaction of the equity markets, it would appear they wanted less from Trump and more from Powell.
Fast-forward to today, August 16. The intraday volatility of the S&P over the last two weeks has been tellingly extreme.Continue reading “Pushing on a String”