Having cautioned virtually every day over the past week (see here and here) what it believes is the biggest threat facing the market, this morning JPM's trading desk commentary echoed and escalated the warning which the markets keep ignoring, to wit:
Market update – it was another relatively slow night and this trend will likely stay in place until 2017 as markets globally slowly dial down for the holidays (attendance, liquidity, and volumes will stay on a downward trajectory for the balance of the year).
Asia saw mixed Asia, Eurozone equities are down small, and US futures are flattish. There are a few headlines in focus (including FDX/NKE earnings, the Spanish bank court ruling, etc.) but none have “macro” implications. At the risk of sounding like a broken record (again), the backdrop for domestic equities remains the same. The single biggest issue for stocks (both in the US but also globally too) is the Trump/Ryan regulatory agenda and its path from paper to reality.
Investors are beginning to focus more on the corporate reform particulars (specifically, border taxes, interest deductibility, and immediate capital spending expensing) and this is blunting some of the initial Trump/Ryan enthusiasm but it prob. won’t be until formal legislative drafts come out of various Congressional committees that stocks pay real attention (although this remains an enormous risk for the tape as the perception around taxes/infrastructure spending and the likely reality are quite different).
Yes, yes, now where is that Dow 20,000 hat...
