But the failure of this level (for the moment) shouldn’t be too surprising. Following a runup of 20%, for some this is a reasonable technical area to sell some/ to take profit.
But is there more to the sell-off this morning?
We did get an announcement that the Congressional Judiciary Committee has launched an investigation into the Trump administration. It includes document requests from 80 people/entities tied to the administration. They will be looking at obstruction of justice, public corruption and abuse of power (the latter of which, might be the most subjective and, therefore, threatening).
After all of the allegations and political mudslinging surrounding Trump, could this pose the biggest risk to the Trump administration and policymaking yet? Possibly.
Congress has a unchallengeable investigatory and subpoena power. They can dig as deeply and broadly as the want, and create as much havoc as they want, which means this may dominate what happens on Capitol Hill until the 2020 election.
Now, with all of this said, if we look at the market reaction today, as a proxy for how the market is digesting this — we did not see across the board selling. That’s good. If we look inside the U.S. stock market, most active stocks were a mix of up and down on the day (including up days Apple, Facebook, Baba and Amazon). That’s good. And foreign stocks were less impacted by the early swing in U.S. stocks. That’s good. The emerging market futures index MXEF actually finished at the New York close UP from Friday’s close.
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