Wednesday's Market Minute: Are You Frightened?

"Not nearly frightened enough," is Aragorn's addendum to Frodo's "Yes" to that question in the first installment of Peter Jackson's Lord of the Rings series, when the two are fleeing a group of zombie-magic kings. That scene came to mind when I read a rather apocalyptic piece by Bloomberg News' editorial board Monday declaring "The World Economy is Stumbling Toward Disaster." It sounds like something you’d typically find on ZeroHedge, but the numbers in this morning’s corporate earnings are likely to instill more fear in investors worried about recession.

With international bellwethers Texas Instruments Incorporated TXN and Caterpillar Inc. CAT missing expectations and offering nothing positive in the way of guidance, the burgeoning reflation trade of the past month– steepening yield curve, leadership from banks and industrial stocks–is likely to take a beating. What's more, TI’s performance may halt the semiconductor rally that's been important to offsetting major declines in software stocks.
The world is not as obviously disastrous as the Bloomberg article asserts, but today is not encouraging. And markets are a relative beast, and expectations for industrial stocks like Caterpillar were bottom of the barrel. “Synchronized slowness” is now the buzzphrase du jour, and last time we used a version of that (“synchronized growth” in early ’18) it was over before it began.

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