It's time for a storm of market rumors to start swirling
March 12, 2019

From Stansberry NewsWire:

  • Most of the S&P 500 Index is finished reporting earnings for 1Q.
  • The lack of color on the trade front is likely to create investor unease.
  • The market could be in for additional selling.

With the bulk of earnings season in the rearview mirror, it's now time for a storm of market rumors – from the likely to the downright ludicrous – to start swirling.

Since the quarter began in early January, asset managers and traders have had a lot of hard data to keep them busy. In addition, pertinent commentary from the Federal Reserve and regular updates from U.S.-China trade negotiations gave market folks plenty of real news to digest.

But now it's crickets and tumbleweeds. Fully 96% of the companies in the S&P 500 Index have reported earnings, leaving retail as the only major sector yet to report. Meanwhile, over at the central bank, the Fed is getting ready to go into its quiet period (Friday, I believe) ahead of the next policy announcement and Chinese and U.S. negotiators have gone quiet.

Let's not forget that China is in the midst of the biggest parliamentary event of its calendar year, so that's caused most of that country's attention to focus inward.

As some market history buffs will remember, this was the time of year when the Greek debt crisis would rear its ugly head. Everyone forgot about it during earnings, but once they had nothing else to talk about, it came crawling back out of the woodwork. (Of course, as the Greek debt crisis turned out to be a real thing, perhaps that's not a comforting example.)

And too often the news media – which has a news hole to fill even when there's nothing going on, latches on to these rumors – giving them longer life/greater credibility than they would have otherwise. And then stocks move on this media-amplified speculation which then makes it newsworthy for other media to cover... . And so on. Of course, the media might initiate the "news" itself by focusing on a negative data point or two to produce headlines. As we've pointed out before, news outlets, like nature, abhor a vacuum.

At the end of the day, don't be surprised if most of the negative stories you're hearing today are just rumors that are taking on a life of their own because of a lack of news or, less innocently, they're being spread by short sellers. As we've mentioned elsewhere, algo strategies have gone near-term negative and the shorts are trying to get ahead of those moves by spreading whatever negative story they can to make it happen.

As regular readers know, we're in a choppy period ahead of the Fed announcement and a decision on a trade deal. Given the recent gains, choppiness means uncertainty, and uncertainty means sell. Be patient. But, be warned, if trade talks fall apart and the administration pushes forward with increased tariffs on Chinese imports, the market is headed lower.

Good investing,

C. Scott Garliss

Every day, Scott and the Stansberry NewsWire team scour the markets and provide real-time commentary on the news and events that are moving stocks. If want to receive their morning commentary and real-time posts, you can download iOS version of the Stansberry NewsWire app here and the Android version here.

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