Friday was a strange day when it came to price action. What could the market be saying?
Friday saw the S&P 500 finish the day roughly flat. But it was anything but a boring day. Under the surface, growth was negative, bonds were negative, non-U.S. stocks – both developed and emerging, were negative, and Gold was negative as well.
What did finish the day strong, were value and small caps. This is interesting because you would expect value and small caps to lead if you believe the economic recovery or rebound to be happening sooner as opposed to it being a longer recovery. One day doesn’t make a trend, but something to watch.
Instead of the week ahead, let’s talk about something to watch for the months ahead – and that’s trade. With Covid-19 getting all the focus, international trade isn’t getting as much attention as it once was. But, leading up to the election does Pres. Trump believe that getting tough on trade will help his reelection? We know that U.S./China relations has cooled with tough talk coming from both sides. But U.S./Canada trade hit a bump in the road last week when Pres. Trump reimposed 10% aluminum tariffs with Canada responding by imposing tariffs on 2.7 billion dollars’ worth of U.S. goods. So, let’s add international trade to the what to watch list as it could definitely be a market mover.
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