WEEKEND WRAP: Despite Impeachment Overhang, Wall Street Is Oddly Calm

By midweek, political events had overtaken actual financial news and numbers as House Democrats turned up the heat on yet another attempt to impeach President Trump.

People with intact frontal lobes understand that the Democrats have once again fabricated the "crime" committed by President Trump. Still, the mainstream mass media complex cannot help itself from flailing about furiously at the behest of their liberal handlers. Would the media actually be impartial, this farcical drama - and the Mueller investigation that yielded nothing - would never even see the light of day.

It's further proof that most Democrats in the House have nothing constructive to add to the national debate other than outsized hatred for President Trump and all of his millions of supporters. If there is justice in this insane world, the Democrats will be outed, joe Biden's son, Hunter, will be tried, convicted and imprisoned, and the Democrat party will implode entirely in the aftermath of a massive Trump landslide.

That's for the future to tell. For the present, Wall Street would rather focus on facts, reality, data, and numbers. Third quarter results for traded corporations will begin rolling out next week. Prior to that, September non-farm payroll data will be released on Friday of this week. Whether traders and speculators can divorce themselves from the kabuki theater that is Washington DC long enough to focus on true economic data is the big question. Fast-moving headlines pushing the impeachment narrative will be difficult to ignore in coming days.

For whatever it's worth, the US economy may not be exactly a juggernaut of capitalist endeavor, it is, however, firing on all cylinders, albeit at a slow pace. By the end of October the world will have the first estimate of third quarter GDP, a number that should make headlines, whether it is good (above 2.5%) or bad (below 2.0%). Anything in the range of 2.2-3.0% will be considered a win for the economy (and President Trump), while across the pond, Europe teeters on the brink of recession.

Also on the horizon is quietude from the Federal Reserve, as the next FOMC meeting is scheduled for October 29-30. Thus, the next possible federal funds rate cut will only be under consideration and newsworthy the last two weeks of the coming month. Should economic data and corporate third quarter earnings reports come in positively there would be a rationale for the Fed to just keep rates where they are. The economy isn't struggling, jobs seem to be still plentiful and inflation fears have been kept in check. The few scenarios under which a rate cut could be considered are, at this juncture, unlikely, including a banking blowup, or taking the impeachment folly as serious.

With all that could go wrong, the world continued to turn following the attack on Saudi oil installments a few weeks back. President Trump tactfully pulled the United States back from the brink of escalation against Iran, instead opting for increased sanctions and a peaceful resolution to never-ending mid-East fanaticism and the associated war-mongering by elements in the US and Israel.

Oil, the lifeblood of the global economy, retreated as the situation de-escalated, and may actually fall below $50 per barrel as winter season looms.

Bonds seem to have found a sweet spot, despite the continued inversion of the 3-month:10-year pair, with the 10-year settling into a range between 1.55 and 1.75%. Should that range prevail over the coming weeks and months, clear sailing for the US economy may be a prudent call. While stocks, still somewhat overvalued, continue to flirt with all-time levels, the NASDAQ notably took the brunt of the selling from last week. That's probably a positive, since the NASDAQ contains some of the more pricey shares of tech companies that may need to be tamped down.

Conclusively, the week was far short of either a disaster or a rousing rally. Could it be, for a change, that the most sane place on the planet was lower Manhattan?

These are indeed strange days.

At the Close, Friday, September 27, 2019:
Dow Jones Industrial Average: 26,820.25, -70.85 (-0.26%)
NASDAQ: 7,939.63, -91.03 (-1.13%)
S&P 500: 2,961.79, -15.83 (-0.53%)
NYSE Composite: 12,971.98, -56.72 (-0.44%)

For the Week:
Dow: -114.82 (-0.43%)
NASDAQ: -178.05 (-2.19%)
S&P 500: -30.28 (-1.01%)
NYSE Composite: -121.82 (-0.93%)