 The Market Sum | Insight after the bell
By Caleb Silver, Editor in Chief
Tuesday's Headlines 1. Markets Mixed after Trump Speech Markets Closed
 Image: Getty Images
Markets Today Tuesday began with a good deal of market optimism ahead of President Trump's highly anticipated speech at The Economic Club of New York, pushing the S&P 500 and Nasdaq to new intraday highs in the process. But that optimism quickly faded during and after the speech, with stocks fluctuating into the red at a few points in afternoon trading. When the dust settled on Tuesday, the major indexes closed only slightly higher for the day (the Dow was precisely unchanged).
Investors were eagerly awaiting any clues on the status of U.S.-China trade negotiations, but mostly just received Trump's stern criticism of China's trade tactics. Specifically, Trump stated that "nobody's cheated better than China," since the country's entrance into the World Trade Organization in 2001. He also said that, "if we don't make a deal, we're going to substantially raise those tariffs." And "that's going to be true of other countries that mistreat us too." This latter comment alluded to European countries that Trump said "charge us extraordinarily high tariffs or create impossible trade barriers."
Also in Trump's cross hairs was the Federal Reserve, which he said has negatively impacted the U.S. economy and equity markets due to the central bank's hesitation in cutting interest rates. U.S.-China Trade Still in Limbo Needless to say, the ongoing uncertainties over a "Phase One" trade deal between the U.S. and China clearly have not been alleviated by Trump's speech. And we likely won't know a lot more until at least December.
Last week, reports surfaced that Trump and Chinese President Xi are unlikely to meet to discuss the Phase One trade deal until next month. The deal was initially expected to be signed at the Asia-Pacific Economic Cooperation summit in Chile this month, but that meeting was unexpectedly cancelled due to unrelated protests and riots. This postponement dimmed prospects for a signed deal, especially after Trump denied reports that the U.S. agreed to roll back tariffs as part of a Phase One trade deal.
This leaves the deal effectively back in limbo, where it's been for quite some time now. Apparently, though, this has not stopped markets from hitting progressively higher record highs in the past few weeks.
Gold Hits 3-Month Low on Market Optimism Despite on-again, off-again market concerns over the U.S.-China trade war, a global economic slowdown, and the potential for a recession, the price of gold has pulled back significantly in the past two months. On Tuesday, gold prices hit a new three-month, intraday low. Though this pullback occurs within the context of a sharp uptrend that has been in place for more than a year, declining gold prices provide some evidence that market worries have abated and complacency may be taking hold. Since gold is regarded as a safe-haven asset, investors tend to buy gold during times of trouble and sell the precious metal when risk appetite rises. If investors are indeed becoming overly complacent, any return of market concerns could quickly result in a substantial surge in gold prices.
Below is a chart of gold futures for the past year, illustrating the recent pullback within a strong bullish trend. chart courtesy TradingView 
FOMO in Play As gold has fallen, the stock market's bullish run in the past five weeks has been palpable. What has been most noteworthy about this run has been the utter lack of any significant pullbacks during this time. According to the Bank of America Merrill Lynch, this may be due to FOMO, or the fear of missing out, on the part of investors. BofAML's chief investment strategist, Michael Hartnett, says that the bank's latest survey of fund managers shows exceptionally low cash on hand, which implies that managers are heavily invested and substantially more optimistic on the markets than usual. We should caution, though, that when investors exhibit FOMO to the point of panic-buying, a significant pullback, or worse, can be a result. Disney+ Launches with Technical Troubles Tuesday's much-anticipated launch of Disney's new streaming service, Disney+, had somewhat of a problem right out of the gates. Users reported technical issues, primarily "unable to connect" error messages. This was likely due to the company having underestimated the heavy demand for the service. Despite this hiccup, though, the damage to its stock was well-contained. DIS shares closed Tuesday up 1.35%. (chart courtesy YCHARTS)  IT services firm DXC Technology soared 20% today as it delivered a strong earnings beat and very positive guidance. Industrial automation company Rockwell Automation rose 10.5%, on convincing earnings and revenue beats. Despite an earnings miss, Tyson Foods still rose 7.5% today.  Auto parts retailer Advance Auto Parts fell 7.7% today as it beat earnings estimates, but fell below same-store-sales estimates. Viacom and CBS dropped 3.8% and 3.6% respectively as CBS missed on revenues ahead of their proposed merger. Word of the Day The Glass-Steagall Act  (Image Source: Federal Reserve History)
Today in History November 12, 1999 Today in 1999 the Financial Services Modernization Act was signed into law. This law removed many of the restrictions that the 1933 Glass-Steagall Act imposed on the finance industry. This repealed restrictions forbidding commercial banks from doing investment banking, and vice-versa. In addition, it allowed the formation of "Financial Holding Companies" which let the same firm own both banking and insurance businesses. This increased consolidation in the finance industry, and may have been a contributing factor in the 2007-08 financial crisis.
Source: https://www.federalreservehistory.org/essays/gramm_leach_bliley_act
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Tuesday, November 12, 2019
Limbo
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