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Playing Hardball: Financial Markets Don't Like It

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Invest With An Edge

By Jerry Wagner

A couple of weeks ago, I started receiving spring training scores on my smartphone. The Grapefruit League was reborn, and baseball was being played again.

I have always loved this time of year. For many years, it was a time for my sons and brothers to venture south together on a guys' outing. It was a time to escape the snow and sit in the sun for a few days to watch a mixture of prospects and veterans get the off-season kinks out and play ball. Even today, with those trips just a bit of loving history, spring training remains the first indication that the winter is ending and that springtime is about to emerge.

In contrast to this positive picture, the financial markets are not enjoying the hardball currently being played. Last week, President Trump's threat of steel and aluminum tariffs scared the markets badly. The eurozone suggested it too was considering tariff moves against U.S. companies, while China considered reprisals against U.S. agriculture. Is a trade war brewing?

At the same time, it appeared that many of our most popular market all-stars were intent on invading their opponent's ballparks. Amazon (AMZN) refused to sell Google (GOOG) (GOOGL) products competing with its own Alexa, and then Google declined to make other support items available on Amazon. And today, Amazon says it's looking into offering checking accounts. Immediately, the big banks began to consider countermoves.

Suddenly, everyone appears to be playing hardball - and investors don't like it one bit.

Last week stocks confirmed the assessment I offered a few weeks ago: The recovery from the recent sell-off would not result in a V-shaped recovery but rather would roughly trace out a W-shaped pattern of recovery. Such a pattern would require at least one more dip in stock prices

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