The market should bounce this morning, but after that we’re heading down.
The technical damage from last week was severe with the bull market trendline that has supported stocks since early November being violated on the S&P 500.
Moreover, stocks finished down during August options expiration week in six of the last seven years. So there is also a negative historical pattern for this week.
In light of today's euphoric market reaction, which has seen the VIX plunge by over 3 vols, or 20% lower, to just over 12 and sent both the Nasdaq and S&P higher by 1% on relief that there were no mushroom clouds of the weekend, the jury is out whether last week's sharp risk off, short-vol mauling will persist or be just another BTFD opportunity. But while last week's tension may already be forgotten, some disturbing trends persist.
After learning over the weekend that Trump plans to call for an investigation into China over allegations that the nation violated U.S. intellectual property rights and forced technology transfers, we learn that several Chinese companies may have submitted bids for Fiat Chrysler (FCA) in a deal that would include the company's iconic Jeep brand. According to AutomotiveNews, at least one Chinese automaker made a bid earlier this month for FCA at a slight premium to the company's prevailing market price but it was rejected for being too low.
Well that didn't take long.
President Trump has responded, via Twitter, to the resignation (and lambasting) of Merck CEO Ken Frazier...
Now that Ken Frazier of Merck Pharma has resigned from President's Manufacturing Council,he will have more time to LOWER RIPOFF DRUG PRICES!
— Donald J. Trump (@realDonaldTrump) August 14, 2017
And now we have the news cycle narrative for today.
The first reaction is in...
Merck CEO Ken Frazier has resigned from the President's Manufacturing Council as a "matter of personal conscience" following Trump's apparent lack of rejection of "expressions of hatred, bigotry, and group supremacy."
Statement from Kenneth C. Frazier, chairman and chief executive officer, Merck:
"I am resigning from the President's American Manufacturing Council.