NASDAQ Negatively Impacted By Trade

By: Kent Engelke | Capitol Securities

The NASDAQ and the S&P 500 were pulled lower by the marquee technology companies that would perhaps be most impacted by a change in trade policy. Industrial and energy stocks… aka value… supported the Dow.

Treasuries were essentially unchanged with the key 10-year bond holding nominally below the psychological 3.0% barrier yielding 2.995%. The negative real yield of the sum parts of the Treasury spectrum is now beginning to gain attention. [Note: a real yield is the interest rate minus the inflation rate].

Several times I have written about negative real yields stating historically such conditions are conducive to inflationary growth.

Will such an environment unfold or will an increase in productivity and the massive pool of available workers that do not exist in the data prevent an inflationary environment from developing?

Historically, whenever the supply side of the economy is stimulated, productivity increases as does the longevity and strength of the expansion as was in the case in the 1950’s, early 1980’s, and the late 1990’s.

What will happen today?

Last night the foreign markets were up. London was up 0.08%, Paris was up 0.17% and Frankfurt was up 0.14%. China was up 1.82%, Japan was up 1.41% and Hang Sang was up 0.56%.

The Dow should open nominally higher on “softer tariffs” than expected. The 10-year is off 2/32 to yield 2.9996%.

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