There is something about the stock market that is so simplistic, and yet we refuse to listen.

I have been asking guests for weeks: what’s wrong with Financials (XLF)? Mostly, they mention private equity and a cap on credit cards, but I think there’s more.

The danger of being dismissive of market action  (when things are going against you) is getting crushed by the time the “news” is official.  Financials (XLF) have been telling us something is wrong for six months now.

Once again, Financials (XLF) are under serious pressure, and most of it comes from banks.

Banks Under Pressure

The KBE Bank ETF is now trading below its 50-day moving average. The KBE is approaching an important trend line. We are watching this closely.

No Resolution for Private Equity

Meanwhile, private equity continues to be under pressure as well.  Global Private Equity ETF (PSP) just took out the November low.

This week has seen nonstop predictions of pain, mostly tied to software loans.

But risks go far beyond software and listed securities.

What’s Needling the Market?

They say the devil is in the details.

The financial media couldn’t wait to fan the flames of inflation fears after the PPI print.  While key headline numbers came in above consensus, detailing little goods inflation, and nothing tied to tariffs.

Most of the pressure came from the service and the government.

The stock market was at the same starting point an hour after the release.

PPI

Final demand for goods: -0.3% M/M Final demand for foods: -1.5% M/M Final demand energy: -2.7% M/M Final demand services: +0.8% M/M Government purchased goods, excluding food and energy: +1.9% M/M

Ten Year Under 4.0%

Meanwhile, the ten-year bond yield (TNX) cracked below 4.0%.

There are always things to worry about when it comes to the stock market, which is supposed to climb over the walls of worry.  Right now, the walls seem to be closing in.  I say let the process play out, as increased pressure will give us better entry points on names we want to own right now.

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