Edge of your seat or under your seat may both be good spots to watch the U.S.-China trade talk-show getting under way Thursday.
That’s judging by the stream ofconflicting news reportsthat have been whipping markets around, such as one report saying the Chinese would bail early, briefly wiping 300 points off Dow futures late Wednesday. Wall Street looks like it is heading for a weaker open, with many investors no doubt ready to hang tight in what promises to be a news heavy couple of days ahead.
And then earnings season kicks off next week with somebig banks. Before you know it, we’re hitting the holidays and maybe some uneasy flashbacks to last year December stock meltdown.
A repeat of that rout may be unavoidable, warns ourcall of the dayfrom former Goldman Sachs alumnus Raoul Pal. “We’re coming into a period of illiquidity for equities,” the author of the Global Macro Investor newsletter, followed by the world’s biggest hedge funds, told MarketWatch in a recent interview.
He cites three reasons why a repeat of that stock selloff may be inevitable. The first is the blackout period for companies, which hits around earnings time when their share buy backs start to slow. Secondly, he notes that this year has also seen problems with the short-term borrowing market, or repo market, that the Federal Reserve has been trying to tackle. It could mean less buying from market makers – who help create liquidity for markets by bringing buyers and sellers together.
Pal says the third biggest issue facing stocks involves the baby boomers, Americans born between the mid 1940 s and mid 1960 s. They face an annual requirement to sell about 5% of their individual retirement accounts, loaded with stocks in some cases, as they reach 70 .5 years old.
“The problem is the gap between this year and last year is huge. It’s like 50% increase in the amount of selling that has to be done, ”said Pal. “They have to start selling by year-end. If you take out the Christmas week and you’re a financial adviser, and you want to get this done early, you will start in October. ”
He blames boomer selling for part of the meltdown for stocks late last year. “The marginal change of an American baby boomer thinking ‘I’ve got too much equities,’ which they do have – that is catastrophic for the system, because they have way, way too much risk,” says Pal, co-founder ofReal Vision financial television.
The market
Dow YM 00, 0. 02% , S&P ES 00, 0. 06% and Nasdaq NQ 00, 0. 13% futures are drifting lowerafter bouncing around on conflicting reports of trade progress.Oil US: CLV 19 is down, gold (GCZ) ,– 0. 71% is flat, and the dollar DXY,– 0. 28% is tumbling.
Europe stocks SXXP,– 0. 16% are mixed. Asia markets ADOW, 0. 02 % rebounded tomostly finish higher.
The chart
Ourchart of the dayshows investors headed for the guidelines in a big way ahead of US-China trade talks. Vanguard’s S&P 500 exchange-traded fund (VOO, 0. 51% shows an outflow of $ 2.9 billion at the start of this week, marking the biggest withdrawal in the past 10 months, notes Naeem Aslam, chief market analyst at ThinkMarkets:
He adds that that’s the second-biggest withdrawal on record since the fund’s inception in September (***************************************************************************************:
The Vanguard fund is the third most popular such fund behind the SPDR S&P 500 ETF Trust SPY, 0. 45% and the iShares Core S&P 500 ETF IVV, 0. 50%.
Read:Securities and Exchange Commission rejects another bitcoin ETF proposal
The buzz
Apple (AAPL, 0. 90% pulled an appthat allowed Hong Kong protesters to track police, a day after being harshly criticized by a China state newspaper.
Opinion:Professional investors are selling stocks as international risks pile up
Oxfam report finds workersoverworked and poorly treatedat a sweet potato farm that supplies Amazon’s (AMZN, 0. 44% Whole Foods, which says that’s not an accurate reflection.
Senate Majority Leader Mitch McConnell, a longtime opponent of reforming marijuana laws, expected to spend two days meeting with industry executives,sources tell MarketWatch.
Blackouts, traffic jams and a rush to buy flashlights across Northern California as Pacific Gas & Power PCG,– 28. 67% cuts power for a million people.
Data with the latest on jobless claims and consumer prices mostly met expectations.
Random reads
Rugby World Cup cancels two matches asJapan braces for Super Typhoon Hagibis
You feel what you eat. Researchers find a link betweendepression and diet
And stay married, live longer, at least in the US,says survey
$ 300 haircut for Rep. Alexandria Ocasio-Cortezraises eyebrows
London airportbraces for chaosfrom climate activists Extinction Rebellion
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