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March 7 Equities Commentary: Todd Colvin

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[Todd Colvin] Good afternoon. This is Todd Colvin coming to you from the floor of the CME Group. We are talking equities and E-mini S&Ps. Kind of a crazy day for stocks. We were down big overnight. We rallied back about 50% of those losses. And we kind of spent a lot of the day grinding higher, grinding higher, and then poof. Close to the closing bell, we go positive again back to the 2730 level in the E-minis. So we basically erased all those overnight losses that we saw that started over in Asia and Europe and came back, and everything's fine. Right? Well, we had a strong ADP number this morning. We have employment coming on Friday. I think the market is pretty much overlooking the employment number, looking more towards inflation, looking more towards FOMC, and, again, trying to absorb all that's coming out of Washington, whether it be about trade or whether it be about fiscal or whether it be about Fed. So I think right now, the market is still very confused. We are seeing some sellers overnight and buyers during the day opportunistically. I think right now the market, with the high volatility that we've seen over the last several weeks -that is one of the reasons why we're getting these wider ranges. We remain in volatility-speak above the 50-, 100-, and 200-moving-day averages, well above those lows from 2017, which seem like a distant memory. We were talking about the VIX index at around 8 or 9. And it just seemed like we were never going to get any life back into the equity markets. And lo and behold, now we're 18 to 20. So things are starting to pick up on a volatility per se, and the equity market ranges are wider. And I think there's a lot of uncertainty out there with all that we talked about. And lastly, let's look at these trade wars or tariffs or whatever you want to call them. There's certainly a lot of talk that, you know, with Gary Cohn resigning that the President's going to go forward, just tariff everybody. I think right now that what the President is doing is he's looking for ways to leverage US potential for lowering either-equaling the playing field. And I think that's what he should be doing. My job is to get you the best bid and the best offer in the market. I think the President's doing the same thing when it comes to trading. And so when we talk about trade wars, yes, you're going to see the small caps and the ones that generate a lot of domestic revenue outperform in the short run. But those larger caps that are getting hit may be buy opportunities here. So right now, I think that the equity markets, as they come down based on tariffs and based on trade wars, which is very much hyped, might be buying opportunities. We'll have to wait and see. Higher volatility suggests that we don't know the answer to that question yet. And as we go forward, the Fed may help us, or a fiscally responsible Washington, DC, may help us. But certainly we're not going to get any clarity today, probably not going to get it by the end of the week. But trade is going to get more balanced, and that should benefit everybody, and I think ultimately will benefit those large caps, which are getting hit. So right now, equities fighting to get back to where they were yesterday on the close. They did so, which means we open up Thursday probably on a more bullish note than we would have. So heading into employment, I'm a little more bullish equities than I was when I went home yesterday. This is Todd Colvin coming to you from the floor of the CME Group.

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Duration: 3 minutes and 6 seconds
Country: Andorra
Language: English
License: Dotsub - Standard License
Genre: None
Views: 2
Posted by: cmegroup on Mar 7, 2018

March 7 Equities Commentary: Todd Colvin

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