May 2, 2019
Market Commentary
By Art Cashin Prepared by UBS Financial Services Inc.
Statistics:
Cashin’s Comments
Fair Value = N.A.
An Encore Presentation
Buy Program = N.A.
Sell Program = N.A. On this day in 1863, there occurred one of those unique accidents of history
that some feel changed the course of world events. Until this day,
Confederate forces had generally bedeviled, confused and confounded a
larger and better equipped Union Army. Confederate successes were clearly
the result of the strategic genius of Robert E. Lee. But military theorists feel
that a good deal of the credit belonged to another man who was, and is,
regarded as one of the great tactical geniuses in the history of American
warfare.
Lee's forces were deployed to defend Fredricksburg, Virginia. General Joseph
Hooker took his Union forces across the Rappahannock River to outflank
Lee's men near Chancellorsville. Enter Lee's ace in the hole the brilliant
"Stonewall" Jackson. Jackson disguised a band of his men and infiltrated
Hookers lines. He told his remaining forces to stand fast and shoot anything
that moved. Jackson and his men accomplished their task and began to head
back.
Unfortunately, one of his other soldiers followed his mandate all too clearly.
Seeing a movement in the bushes he fired, mortally wounding the returning
Jackson. With Jackson out of commission, the battle was a draw (costing a
mere 30,000 lives). More importantly, to some, Lee would come, three
months later, to the decisive battle of the war (Gettysburg) without the man
who had become his right arm, Jackson.
To celebrate have a mint Julep, on the charge, at Picketts and explain, very
carefully, to a co-worker that Pogo was insightful, particularly for a place like
Wall Street, when he observed "We have met the enemy and they is us!"
The market got shot by presumed friendly forces as Fed Chair Powell gunned
down the bulls in the final 90 minutes of trading.
The day began rather hopefully for the bulls. With many markets closed for
May Day, volume was exceptionally thin and the happy hangover of the
Apple earnings put a bid under stocks at the opening bell.
For most of the morning, stocks drifted sideways, holding on to their opening
gains.
Shortly before noon, the bulls tried to start a rally but it quickly stalled as it
found solid resistance at last week's intraday highs.
Cashin’s Comments May 2, 2019
Page 2 of 3
The failure of the rally seemed to disillusion some traders and that allowed stocks to pull back into mild negative
territory. They then circled the wagons and awaited the FOMC statement at 2:00.
As we awaited the statement, I sent a mildly cautionary note to some friends:
Thanks to Bob Pisani's producer, Kirsten, we learn that Powell has presided over nine Fed days since his
appointment. On 8 out of 9 of those days, the S&P has closed down.
We didn't realize it at the time but the note was rather prophetic.
At the 2:00 p.m. release of the statement, the Dow rallied briefly but failed to rise to the level of the morning
highs. Nevertheless, stocks held most of their gains until Powell stepped to the lectern.
Responding to an early question, Powell seemed to dismiss concerns about weaker than desired inflation. He
intimated that he, and probably the whole FOMC, saw the weaker inflation as temporary or "transitory".
Stocks heard that as casting doubt on a possible rate cut later this year. That brought selling into stocks, which
soon began to feed on itself and later became a near rout.
Interestingly, the players in the bond futures market still see a 53% chance of a rate cut later this year.
While Powell seemed to pooh-pooh the chance of a rate cut, the FOMC did in fact lower the rate it pays on
excess reserves. I think the rate cut on excess reserves is clearly inconsistent with Powell's commentary but we'll
discuss that at some future date.
So, Chairman Powell has now presided over 10 FOMC days and on 9 of those occasions, the S&P closed down. I
think he'd really like to break that streak.
Overnight And Overseas – Tokyo and Shanghai remain closed. Hong Kong closed with a moderate rally, while
India was down fractionally.
London was also off fractionally and Paris and Frankfurt are seeing modest losses.
Among other assets, Bitcoin continues to rally and is now trading just above $5700. Gold and crude are both
modestly softer. The euro is a shade firmer against the dollar and yields are up a tick or two.
Consensus – Rumors float that a China deal may be struck as early as May 10th. Futures, so far, appear to be
shrugging off those rumors.
Traders may home in on oil to see if it can stem its inventory driven pullback.
Stay wary, alert and very, very nimble.
Have a wonderful weekend.
Trivia Corner
Answer - The letters missing from the alphabet string could spell the word "Smoking". Since they were not
present in the string, there would be "No Smoking."
Today's Question - More alphabet strings - What's represented here:
ABCDEFGHIJKLMNopQRSTUVWxYZ
NO COMMENTS FRIDAY
Cashin’s Comments May 2, 2019
Page 3 of 3
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