Market Feels Greyish

If you are a close observer of the markets, you would have noticed a significant shift in market sentiment from the start of the year verses last year. There are several fresh factors which are impacting the markets this year:

1) The Fed interest rate increase have started and anticipated to continue through the rest of 2018. This will raise the cost of expansion for businesses and impose a drag on growth.

2) The start of a trade war between China and USA. A danger here is the increase in cost of doing business and limit export and earnings.

3) The market highflyers aka FAANG stocks are coming under pressure, especially Facebook (with Cambridge Analytica) and Amazon (from President Trump).

On the broader perspective, economic growth may experience headwinds in the future. The abrupt nature of President Trump may affect or even turn around 2) and 3), however, 1) can be a significant factor in determining market sentiment as bond holders and equities investors are hit on both sides of a decline in bond prices and unattractive equities environment.

The markets are certainly looking a lot less rosy and more greyish these days.