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Trader Talk: Week of September 30, 2019

Bullseye Brief

Bullseye Brief
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Wall of Worry

You can understand why speculators have pivoted to being net short for only the fourth time since 2016, according to weekly CFTC data. The barrage of commentary around recession and impeachment is enough to drive anyone to cash, not to mention campaign promises like eliminating private healthcare and ditching fossil fuels.

Fortunately, I think the bark is worse than the bite… and history reveals markets actually rallied each time traders became overly bearish. I am intrigued that Honeywell has upped its dividend by 10%, and the Citi Economic Surprise Index has posted its largest 3-month gain since 1998.

These are not signals of impending doom, nor are income and spending gains which reflect the strongest labor market in 50 years. I admit that my portfolio has been sideways for several months, but a high teens return is still double the long-term norm.

As for the bears, I think they’ll be forced to cover when the US and China come to terms on trade. Mr Trump needs a win right now, and that’s one he can control.


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