Wall Street Strategies
Hello! Sign in or Register

Morning Commentary

Clipped into the Close

By Charles Payne, CEO & Principal Analyst
4/10/2018 9:28 AM
Take a Free Trial
Try Charles' premium stock selection services free for 14 days. Check it out in real time! You will get actionable advice, trading ideas and email alerts.

All major indices closed higher on Monday, but the composition of the market changed dramatically into the close.

The market was within the Dow points, trading well above 300 points until a one-two punch. It was really more like a jab, and then an overhand right hook. 

The Jab

The Congressional Budget Office (CBO) report currently sees a 2018 deficit of $804 billion, up  $139 billion from the 2017 deficit.  From there, deficits climb each year:

The flip side is that the economic growth is now modeled better than before.


Tax cuts were always a double-edged sword for the administration, which believes supply-side economics will generate a faster economic growth needed to curb deficits and reduce debt. It’s clear from the CBO report that is the case, but since the tax plan was introduced, Washington passed that $1.3 trillion spending bill that has dramatically changed even the most optimistic outlooks.

The Hook

The CBO news slowed the rally, but reports of raids on Donald Trump’s lawyer Michael Cohen’s office and hotel room sent everyone scurrying for the exits.  It remains to be seen if this is a desperate move on the part of Robert Mueller or what it even means for the president.

Initial reports say the evidence taken was mostly associated with payments made to porn actress Stormy Daniels.

I’ve talked about the notion of a constitutional crisis knocking the wind out of the market in the past.  This isn’t that, but it’s a bombshell that will stir the mass media speculation that influences the market.  Individual investors have already rapidly become bearish.  

Coming into 2018, bullishness was at its highest level since December 2010, and bearishness was at the lowest level since April 2004.

Contrarians should feel great now because sentiment has completely flipped since.

I continue to say that you should focus on fundamentals, not nonfinancial headlines.

Today’s Session

The market is looking higher on concessions by President Xi of China.  During his 40-minute address, Xi reiterated his goal of China being a partner committed to international trade order.  He has made these kinds of remarks in the past, but the fact of the matter is, China understands it must play within certain norms as it works to take over the top spot in the global economic pecking order.

Interestingly, he also mentioned the “cold war” and “zero sum” mentality in reference to President Trump’s approach to publicly challenging China on trade, conflating demands for free and fair trade as an affront to a “world aspiring for peace and development.”

I think this is a huge win for President Trump, which means the street will play it down as the establishment is loath to give him any credit even when it moves the needle in favor of all Americans.   Let’s see what “news” develops into the close. 

That said, I remain very confident on the market based on strong fundamentals that will be the building blocks for the economy.

In my humble opinion, this is beginning to sound and feel like a 21st century version of "Pump and Dump." A day like yesterday looks like early pumping. When the stocks were where the controllers wanted them, the dump began so the big guys could take their profits. I'm afraid the small investors like myself are, again, going to suffer greatly. We are at the mercy of those who manipulate the algorithms. We should be asking: Who are they? Who controls them? What are they trying to achieve? The rip-roaring economy we are enjoying (or are we) should be generating great confidence and growth in the stock market. Is there any honor or fiduciary trust left on Wall Street?

Francine Paino on 4/10/2018 10:01:54 AM
It's about time "the market" recognizes that Mr. Trump is a seasoned businessman and knows "the ropes" when it comes to "negotiating" what he's seeking. Remember...he wrote the book, "THE ARE OF THE DEAL." In the case of China, early indications are the President has laid his cards on the table and President Xi, while not "folding," is indicating that he recognizes that he is not holding the "winning hand" and that he will have to "give" if he wishes his country to "take" in the future. On another issue seeming to affect "the market," the FBI raid of President Trump's attorney's home and offices is just a bit of a "stretch," don't you think, when it comes to the "authority provided" Special Counsel Muller (who apparently and full-heartedly) supported this "raid." It has been pointed out, numerous times, that Mr. Muller has been EXCEEDING (if not his authority) at least his "reach" in the expansion of his "investigation" into the so-called Russian collusion by the Trump campaign, and/or any others associated with the President's efforts to win the White House. How long do we sit idly by watching while this man, Muller, grasps at every straw that could bring legal action against the POTUS? I have every, sound belief that the media "coverage" of the actions of Robert Muller and his team of self-appointed investigators is...and HAS had...a profound effect upon the UP and DOWN action we have been witnessing on Wall Street. The longer Muller's "actions" take place, the LONGER it is going to take for "the market" to settle down. SOMEONE needs to tell this "Special Counsel," get the job DONE, or face a Congressional shutdown of his "authority" to continue with this farce!

James Warlin on 4/10/2018 12:46:42 PM

Add Your Comment

Submitted comments are subject to moderation before posting.

Home | Products & Services | Education | In The Media | Help | About Us |
Disclaimer | Privacy Policy | Terms of Use |
All Rights Reserved.