The market is falling lower on Trump chaos and there are no signs of technical support. The market action has been very poor for a while, but the mood took an ugly turn on Monday. Stocks, bonds and the dollar were all hit hard, and investors are becoming disgusted and angry with the lack of progress on tariffs.
Trump’s Fed Attacks Stoke Volatility
President Trump did not help matters by calling Fed Chair Jerome Powell a “loser” who isn’t cutting interest rates fast enough. Trump may have a good point about not cutting rates now that inflation has cooled, but he is overlooking how much the market counts on the Fed for monetary stability. Firing Powell would likely cause a further market selloff.
The World is Selling U.S. Assets
The deeper and more fundamental problem that is driving this poor action is that the world is selling U.S. assets. There is no appetite for U.S.-based assets that are subject to the great uncertainty of tariffs and the potential negative consequences that many economists are predicting.
No Technical Bottom in Sight
The primary question for investors to ponder is whether the market is moving closer to some technical support. The general consensus view is “no.” More downside is expected, but that is probably a positive because it indicates that most folks who are inclined to sell may have already done so already.
Light Volume, No Capitulation
Technicians are focused on the relatively light volume. The traditional view is that markets bottom when there is a surge in volume and panic selling. That is viewed as a capitulation and suggests that the worst is over. There wasn’t any clear capitulation today because the volume was so light despite the decline in the big point. There was a lack of buyers rather than aggressive sellers.
Disgust and Disinterest Mark True Bottoms
However, the reality is that most major bottoms occur with a whimper and not a bang. In 2009, there was nothing remarkable about the trading action on the day that was the ultimate bottom. Bottoms are more a function of maximum disgust and disinterest rather than fear.
Market Still Waiting for Real Solutions
Regardless of which approach you take, there isn’t anything yet to indicate that we are on the verge of a market turn. We desperately need something positive. The Trump narrative is that Wall Street benefited from the economy for many years, and now it is time for Main Street to benefit. Main Street is not benefiting from this. The economic fallout is impacting everyone negatively and is causing some severe political problems for Trump.
I expect to see Treasury Secretary Bessent address these dire market conditions very soon, but at this point, the market wants some solid action and not more talk or empty promises.
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