Donald Trump
The markets had been looking for real progress from Trump's promises on tax reform and regulatory rollbacks. The uncertain fate of this week's health-care vote has thrown into question the administration's ability to get the rest of its agenda implemented in a timely fashion.
While the market shrugged off the March 15 Fed interest rate increase in anticipation of Trump-spurred economic growth it might not have quite as strong an appetite for the two more hikes central bank officials have indicated they will approve this year.
"There's a real policy timing mismatch here," Arone said. "Yellen is moving the ball down the court, while Trump still has failed to put the ball in play."
A question of value
Market action since the rate hike, coincidental or not, hasn't been pleasant. Following a rally the day of the Fed's move, stocks have been lower since. Tuesday's washout contributed strongly to a week that had the S&P 500 lower by 1.75 percent as of Wednesday afternoon.
The decline has come as market watchers question whether the aggressive 10 percent post-election rally needs to catch its breath. Valuations looked stretched, with the index trading at more than 18 times forward earnings.
Enthusiasm over Trump had been able to forestall valuation concerns. A defeat on health care could reverse market sentiment in a hurry.
"The market has embraced the Trump agenda through thick and thin," said Quincy Krosby, market strategist at Prudential Financial. "Anything that looks as if that may be delayed or watered-down or that he is not the great negotiator that he campaigned on has an extended, overbought market questioning whether or not valuations at this point are correct."
That leaves the Fed in a potentially uncomfortable spot.
A week ago, investors believed and embraced the concept that the Fed could and would raise rates a total of three times this year. However, just a few market undulations have lowered that conviction, to the point where traders assigned just a 53 percent chance by Wednesday afternoon that a third increase could come by December. Earlier in the day, that probability actually fell below 50 percent.
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The markets had been looking for real progress from Trump's promises on tax reform and regulatory rollbacks. The uncertain fate of this week's health-care vote has thrown into question the administration's ability to get the rest of its agenda implemented in a timely fashion.
While the market shrugged off the March 15 Fed interest rate increase in anticipation of Trump-spurred economic growth it might not have quite as strong an appetite for the two more hikes central bank officials have indicated they will approve this year.
"There's a real policy timing mismatch here," Arone said. "Yellen is moving the ball down the court, while Trump still has failed to put the ball in play."
A question of value
Market action since the rate hike, coincidental or not, hasn't been pleasant. Following a rally the day of the Fed's move, stocks have been lower since. Tuesday's washout contributed strongly to a week that had the S&P 500 lower by 1.75 percent as of Wednesday afternoon.
The decline has come as market watchers question whether the aggressive 10 percent post-election rally needs to catch its breath. Valuations looked stretched, with the index trading at more than 18 times forward earnings.
Enthusiasm over Trump had been able to forestall valuation concerns. A defeat on health care could reverse market sentiment in a hurry.
"The market has embraced the Trump agenda through thick and thin," said Quincy Krosby, market strategist at Prudential Financial. "Anything that looks as if that may be delayed or watered-down or that he is not the great negotiator that he campaigned on has an extended, overbought market questioning whether or not valuations at this point are correct."
That leaves the Fed in a potentially uncomfortable spot.
A week ago, investors believed and embraced the concept that the Fed could and would raise rates a total of three times this year. However, just a few market undulations have lowered that conviction, to the point where traders assigned just a 53 percent chance by Wednesday afternoon that a third increase could come by December. Earlier in the day, that probability actually fell below 50 percent.
Watch PA please
In trading, you have to be defensive and aggressive at the same time
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