By: Kent Engelke | Capitol Securities
Equities rose as earnings provided a respite from tension over trade and geopolitics. The S&P 500 rallied back above its 200-day moving average as early profit reports suggest that neither tariffs or tightening conditions are as bad as some have been suggesting.
Buying accelerated late in the day… buying that was the result of technology-based trading.
Is intense volatility the new trend?
Speaking of trends, Blackrock, the world’s largest money manager, saw its net inflows soften in the third quarter to the lowest since 2016. Blackrock stated institutions withdrew $24.8 billion from its index and active products. These outflows, however, were offset by its iShares exchange-traded business.
What I found interesting is its earnings statement: “Institutions do not understand the political instabilities…they are worried about the impact of global trade. A common conversation we are hearing from clients is: are we at peak earnings?”
As noted, institutions are withdrawing monies while their iShares (indexing) is gaining money. Historically, when retail monies dominate a trade, the trade is in its final inning. How will this scenario unfold especially as indexing is perhaps the most crowded trade ever in mankind?
NFLX reported earnings at yesterday’s close. It was the inverse of the second quarter’s report. Shares are substantially higher.
Last night the foreign markets were mixed. London was up 0.19%, Paris was down 0.21% and Frankfurt was down 0.49%. China was up 0.60%, Japan was up 1.29% and Hang Sang was up 0.07%.
The Dow should open moderately lower even as some high profile companies surprised. What caused a reversal of the sentiment? Equities going too far too quickly? Bloomberg writes: “There is a colossal change in sentiment from yesterday’s close to today’s opening.” How will this day unfold? The 10-year is unchanged at 3.16%.