Investors Ready for Week of Events That Could Rattle Markets

[question everything]

Traders are bracing for an eventful week, as an expected Federal Reserve rate increase, Dutch elections and a potential step by the U.K. toward exiting the European Union play out amid markets that appear vulnerable to sudden reversals.

Throughout a strong 2017 rally in global stocks and commodities, some analysts have worried that improving economic fundamentals were driving outsize investor bets that left many asset markets “crowded.” Investors with large positions can be quick to retreat on any disappointing news or data, leading to a cascade of selling as similarly positioned traders scramble to reduce risk.

Those fears were borne out in part last week, when oil prices tumbled nearly 9% over three trading days after U.S. crude stockpiles hit a record high. The price declines short-circuited a yearlong rally in which oil prices doubled to more than $50 a barrel from their February 2016 low, and left many traders worrying that further declines could be at hand as the market grapples with the true risks posed by a longstanding global supply glut.

(snip)

Central banks pose one hurdle to the continuation of the markets’ recent successes as the tide of global easy money is turning. Robust U.S. job gains and growing wage pressure nearly ensure the Fed will raise short-term interest rates when a two-day policy meeting ends Wednesday. The U.S. central bank will also likely signal a growing conviction that it will follow through with more rate increases later this year. Meetings at the Bank of England and the Bank of Japan are likely to underscore the idea that additional accommodation by global central banks, which helped fuel market rallies, is now off the table.

European investors in particular have a busy calendar. In the Netherlands, the party of Geert Wilders, an anti-Muslim nationalist, is now second in polls to the conservative party of the current prime minister—after a long stretch in the lead. A surprisingly strong performance for Mr. Wilders, who wants the Netherlands out of the euro, would likely nudge Dutch yields back up after Wednesday’s election. Though Mr. Wilders isn’t expected to gain power, investors would interpret support for him as a mark against European integration.

More..

https://www.wsj.com/articles/investors-gird-for-busy-week-of-potential-whipsaws-1489320006

[Warpy]

1. Oh, my, there goes my stock in a Dutch company

until next week when investors realize it was a good company, after all, and move the price back up.

The air is slowly seeping out of the Trump Bump bubblet here in the US. Although large drops make for more interesting press as they tapdance around the real reasons for it and would splash a little fiscal poo on the Republicans, slow seepages are generally easier to take.

Add to this two articles I saw on how cash will be king in the coming months, and it looks like a lot of analysts are preparing for more than a moderate correction. Sic transit glorious money and don't panic.