Locking bias

Locking bias

After a terrible run where the Dow shed a total of nearly 1500 points, stocks are pointed higher so far this morning.  Today’s move higher comes on the heels of Brazilian stocks falling nearly 10% today as news of a scandal involving newly elected President Michel Temer hit the wires.  It was reported that President Temer gave his blessing to attempt to pay a potential witness in exchange for their silence in the country’s biggest-ever graft probe.  Given that Brazil makes up approximately 7.4% of the emerging market index, this will impact investors here in the US who have a share of their holdings in the currently popular emerging market segment. 

 

Here at home in the US, President Trump is also under pressure, as a special prosecutor has been assigned to investigate potential collaborations between the Trump administration and Russia in last year’s election.  Although President Trump assures the public that there is nothing to hide, his actions may show that he attempted to hinder a potential investigation.  If that’s the case, many will question his motives and assume there is something to hide.  As this story continues to unfold, we could see volatility within the stock and bond markets continue. 

 

With bonds facing the most significant ceiling of resistance at the moment, we will continue yesterday’s locking bias change of stance.