Market Loses its Hopium-Induced High, Falls Four Weeks Straight
Market Loses its Hopium-Induced High, Falls Four Weeks Straight by David Haggith for The Great Recession
Stocks posted their fourth straight weekly loss across all three headline indices this week, but more important than that they proved convincingly on Friday that the market is as fully intoxicated as I claimed in my recent article, “Hopium Floats.”
The path of indices through the day looked like a side-on view of the flight of my lunatic crow (sole heckler) just before he hits a wall at the end of his day and slides down it to the ground:
The head-spinning delirium exhibited by stocks on Friday opened with stocks down because of overnight harsh rhetoric from China. Chinese officials uncharitably accused Trump of “playing little games” and stated, “If the U.S. doesn’t make concessions in key issues, there is little point for China to resume talks…. China’s stance has become more hard-line and it’s in no rush for a deal because the U.S. approach is extremely repellent and China has no illusions about U.S. sincerity.”
The Communist People’s Party Daily ran an editorial overnight, titled “No Power Can Stop The Chinese People From Achieving Their Dream,” which stated, “the trade war will not cripple China, it will only strengthen us as we endure it,” and “if anyone thinks the Chinese side is just bluffing, that will be the most significant misjudgment since the Korean War.” Some of this anger was churned up by the US Commerce Department’s move to blacklist Huawei from being able to buy any parts from the US. This, the Chinese said, was an act that does not show good faith in the negotiations. So, why bother?
Sure, that sounds like the kind of saber rattling the US routinely experiences from lesser countries than China, However, among the numerous expressions among Chinese articles, not one hint of desire to get back to talks could be found. The US Secretary of the Treasury said Thursday talks would be rescheduled soon. China said Friday, “Nope.”
Naturally, then, the Friday morning news started off with the US stock market lower than its previous close, and the US market had good company. Chinese stocks had fallen 2.5% overnight. Europe also completed a nice tumble just before the US market open. And, so, the US market opened in the red.
Somewhat less naturally perhaps, the market instantly rocketed upward at the starting bell because the consumer sentiment report prior to the market’s open came in like a snort of hopium straight up the nose. Fair enough … maybe. It was the hottest print in fifteen years, but the sudden morning high above the previous day’s close after so much bad news about the only news that had mattered all week made it seem as though the market was desperate for any high it could get … like it was now smoking rope.
Other good news providing lift during the early afternoon: Trump smartly announced he was ending tariffs on Canadian and Mexican steel and aluminum and settling old WTO trade squabbles to clear the way for ratification of his trade deal with Canada and Mexico.