May 25, 2022
Good morning,
European stocks and U.S. Futures were quiet and largely unchanged overnight and into this morning, right up until China’s Premier Li said his country’s economic difficulties are worse now than in 2020. Global markets dropped about half a percent, and are sitting there now awaiting the opening of our cash market.
The Fed minutes to the last Fed meeting get released this afternoon. Although that meeting was only three weeks ago, it feels like the world has moved on considerably since then as growth fears continue to percolate.
Li’s comment today was not news to anyone watching that country’s shutdown to handle their current Covid crisis. Yet, markets dropped on the announcement. Likewise, today’s Fed minutes should not contain any news, and yet we will likely see a similar market drop upon their release. It’s rare that markets react more than once to the same news announcements. That only seems to happen when market psychology is at its darkest. Another sign of a deeply oversold market.
Be well,
Mike