23
Mar

Wrap – Week Ended 3/22/19

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We Are Back From Spring Break!  Good week until Friday. Friday was a think-later-shoot-first kind of day, basically resetting the clock on the week's gains as markets turned to renewed fears of recession (yield curve inverted) leaving everything in our space essentially flat.  The ZLT remains up ~ 16% YTD.  

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Questions and comments under The Wrap will be addressed in the Monday Post. 

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Interested in subscribing to Z4 Research?  Send your questions to zman@zmansenergybrain.com.

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5 Responses to “Wrap – Week Ended 3/22/19”

  1. 1
    brodway Says:

    hope you don't mind me moving the link to the wrap page.

     

    https://www.bloomberg.com/news/articles/2019-03-22/the-yield-curve-is-inverted-remind-me-why-i-care-quicktake

     

    this is quite important, as this inversion was last seen in 2007 which was right before the big financial meltdown. i don't believe that another meltdown is imminent, as there have been many triggers/regulations instituted that are still in force, so the banks are better capitalized today then they have been in decades. i do believe that the inversion is telling us that the economy is pausing and many of the tax benefits have already been realized by companies and that has been reflected in companies adding more workers. however, the gainful employment rate is as good as it's going to get with a tight labor market. rising wages, which we have not seen since the beginning of the year may actually stall the continued hiring of workers, leading to a slowdown.

    i've heard that a good number of money managers have not bought back as much equity after the recent dip to 2300 S&P. so there is still a good bit of money on the sidelines not believing this quick reversal in prices is justified. it would not be surprising to see a retest of the 2300 level at some point in the next 6-12 months unless a catalyst boosting economic activity present itself. this catalyst could be in the form of a comprehensive trade deal with China or European economy finally shake off the bearish activity it has struggled with for over a decade now. i personally see risk to both, so i'm leaning towards being cautious.  

     

  2. 2
    zman Says:

    re 1 – thanks

    Futures ought to be interesting tonight. 

  3. 3
    brodway Says:

    should the economy in fact enter a recession in 2019 or 2020, it would make a re-election for the the presidency challenging for the Republicans. Trump's claim to fame has been the economic boom he was able to manufacture with his numerous efforts to favor US manufacturers. the famous slogan "make America great again" may fizzle if the economy begins to stagnate going into the election.

  4. 4
    brodway Says:

    here's another view of the inversion of the short term/long term yield. scrolling down also shows the crude chart. struck me as rather bullish

    https://www.investing.com/analysis/week-ahead-200400500

  5. 5
    Baylor Says:

    2 key people I follow for the last 15 years and have largely been spot on have issued BUY signals in the last 2 weeks for what it’s worth. 

    They could certainly be wrong this time

     

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