Stocks rallied today after China indicated it was willing to start trade talks again. At the close the Dow was up 269 points at 25,898 on lighter trading volume which is expected since this is the week before Labor Day.
The market is being pulled between headline risk, ok US fundamentals and a slowing global economy. Indicators from IBD show stocks in “rally under pressure” while the good folks over at BTS moved from a 30%/70% allocation of US Treasury/ High yield to a defensive treasury/cash position. Reasons for the switch are elevated volatility levels coming from trade tensions and all the disruption in global supply chains. BTS also cited weak forward guidance issued during earnings season.
With Q2 earnings mostly in the books the numbers came in better than expected but still showed a decline. The gurus had been forecasting a drop-in earnings and the actual results with 90% of S&P 500 companies having reported was a decline of 0.7% which was 5% better than expected. 75% of companies beat estimates and there was a 40% increase in the number of companies using the word “tariffs” in their reporting. With all the trade issues sweeping the globe it is hard for companies to plan since every day a new tweet brings a new policy.
The scout trip was a success. The 18 boys met scouts from Britain, Germany, France, Cyprus, Portugal and the Seychelles Islands which are off the east coast of Africa. We hiked to two different huts, did canyoning, rode bikes down ski slopes, ate fondue, swapped patches and scarves and visited the US Embassy in Bern and a Castle in the City of Thun which dated back to 1,200. The British girl scouts seemed to take a keen interest in our scouts and many friendships were made. Each day was a new experience and all the hiking we have done the past few years came in handy as the scouts seemed to scale the Alpes with ease. They are already planning on a return trip in 2023. I saw several Tesla Model 3’s in the village. All were dual motor cars.