Less Uncertainty

This is what happens when you get some uncertainty cleared out.  Investors no longer are worried about Syria, and the trade war worries could only go on for so long before concrete proof of tariffs.  The trade warmongering has all been speculation and Trump's bluster.  They will bring the tariffs under review by multinationals and also the small fry who might be affected in May.  It will either be shelved or heavily watered down, as it is with anything that can hurt corporations.  But in a liquidation market, which was late March/early April, it was shoot first, ask questions later on tariffs.

The game plan is to just ride out the long a bit longer, up to SPX 2720 and/or 2760, depending on how this week goes.  I would give stocks the time to slowly rise this week, and see how high it can reach.  If you consider the bottom of the recent selloff as April 2, then this market should have about 4-6 weeks of runway to grind higher before the fast money is fully on board again.  That points to early to mid May as a possible topping out point.  That also agrees with the corporate buyback window reopening in late April as most earnings will be reported by then.

There could a couple of minor pullbacks (1-2%) this month along the way to 2720-2760, but they should be buyable as the grind higher window(early April to early May) is still well in effect.  Not expecting an explosive move higher to 2800+ just because of the length of the U bottom and the overall complacent retail investor atmosphere.

This isn't a great environment for putting on really long term equity positions.  It is too early to put on shorts, and although ok to put on longs for the short term, longer term, I expect lower prices to prevail.

Bonds are in a tale of two cities.  It is the short to intermediate end of the yield curve and then everything else (long end, global bonds).  The short to intermediate part of the Treasury curve continues to trade weak, as the Fed refuses to budge on their rate hike path despite the recent equity weakness.  The long end continues to outperform, as does non-US government bonds.  Australian 10 year yields are now below US 10 year yields, and the EU, Asia, and Canada 10 year yields continue to grind lower as the US yields stay near year to date highs.  In general, a flattening yield curve and strengthening global bonds are bullish for Treasuries.