Local market is showing signs of tepidness as we head to Jackson Hole Friday US time and on reports of US manufacturing sector shrinking for the first time since September 2009, suggesting that the sector has already faced headwinds from the US-China tariff wars. But US market overnight is to be praised for calmness and some resilience. We are still in that transition period as far as direction goes and what comes out of Jackson Hole is likely to be pivotal. But as I write, local resource stocks are on the way down (lot more down from here) , gold miners are holding and underperforming microcaps (Dog stocks ) are facing more liquidation and will likely test their lows (some already have as per the Table below eg NUH, BUD) . The Flight to Quality always present itself during times of trouble in the market - this time around though it is not greeted with as much enthusiasm. Like it or not, we are bracing for a recession based on leading economic indicators that usually lags and the markets are not in the mood to extend their recovery unless there are (I) evidence of a reversal in the trade war dispute and (II) evidence that the horses have not bolted from the barn.
So with US economy looking like faltering despite the administration's denial, will it portend the end of POTUS reign ? The world hopes but at least one third of his base cares nothing for what he does wrong (they will support him unequivocably) . Then there is a question of whether the person from Democrat who can replace him will be from the left with left policies.
