Bessent's White House Lead Could Trigger Stock Upside
U.S. Secretary of the Treasury Scott Bessent appears to be gaining authority in President Trump's trade war as investors seek reason for optimism.
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The week started with a little panic on Monday morning, but that turned out to be the low of the day. Some brave dip-buyers showed up, and the market chopped around before closing in about the middle of a very large trading range. Volume hit record levels in some areas, but it was positive to see some underlying support.
Breadth was around two-to-one negative, but most notably, 4,250 stocks hit new 12-month lows. At the end of the day, only 13% of stocks are over their 200-day simple moving average, and less than 5% of all stocks are over their 40-day simple moving average.
The Magnificent Seven names were the leaders as they rebounded from the morning lows and ended with a gain of around 0.2%. The Nasdaq 100 QQQ managed a gain of 0.3% after a very ugly open.
It is an extremely chaotic and volatile market. The primary concern is that President Trump’s aggressive tariff policies will cause inflation and a slowdown in growth. However, what is really causing the biggest problem is that it is unclear how much negotiation will take place. White House trade advisor Peter Navarro stated that there will be no tariff negotiations, but at the same time, Treasury Director Scott Bessent stated that President Trump has appointed him to negotiate trade with Japan. There is a very inconsistent message, and it is keeping buyers sidelined.
There was a brief flurry on a headline that tariffs would be delayed, but that turned out to be fake news. They are scheduled to go into place on Wednesday. I suspect that the Trump administration will continue to create the impression that it has no great desire to negotiate as a tactic, but once a deal or two is made, that should provide some relief.
There appears to be a little more optimism during the day that tariffs will not be the disaster that is feared. It appears that Bessent is obtaining more authority, and it has always been his position that the initial tariffs are a cap that will be negotiated downward. He states that over 50 countries are ready to talk.
The good news is that there are a slew of stocks that are down substantially, and many of them have good values. The charts are still a mess, but there was a little preliminary support on Monday. Any positive news about tariffs is going to trigger some quick upside moves.
Have a good evening. I’ll see you tomorrow.
At the time of publication, DePorre had no positions in any securities mentioned.
