Need to Know: The bad-news-is-good-news era may be over for investors

August is typically a volatile month for stocks, and this one certainly fits the bill.

After another rocky session, U.S. stocks on Wednesday finished pretty much where they started. DataTrek Research pointed to a finding that basically all the moves in the S&P 500 going back two decades is tied to the three days around Federal Open Market Committee meetings, and more recently, the Fed’s press conferences and dot plots. Guess who doesn’t meet in August?

Ash Alankar, head of global asset allocation at Janus Henderson Investors, says in the call of the day that financial markets may be shifting to a new era where fundamentals actually matter.

“The era of bad news is good news might be coming to an end,” Alankar said in a phone interview. On Wednesday, for instance, the news that three central banks cut interest rates was greeted by alarm rather than celebration, he pointed out.

Not that the fundamentals, particularly in the U.S., are terrible—interest rates are low, inflation is stable, job growth is still solid, many mortgage borrowers are able to refinance to still-lower payments—but Alankar isn’t a fan of stocks at the moment. He said the firm takes a close look at option pricing, and stocks aren’t pricing in enough downside.

One risk to stocks comes from President Donald Trump, he says. Alankar points out that Trump has elevated tariffs against China every time the S&P 500  has reached highs.

If there’s one thing the market isn’t expecting, it’s inflation. Yet he points out tariffs are on the rise, the Fed is loosening policy, and the labor market is strong—all ingredients for inflation. “If inflation comes, it comes fast,” he said.

Gold——and precious metals look attractive, as do bonds, he says. In stocks, he prefers Japanese and European equities over U.S., and growth over value. Despite the historic gap between growth and value, Alankar says he prefers growth plays because they are long-duration assets.

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The market

After a mere 22-point decline for the Dow Jones Industrial Average  on Wednesday, U.S. stock futures were pointing higher. Europe  and Asia  stocks advanced.

The yield on the benchmark 10-year Treasury  rose by 5 basis points.

Gold  futures fell while oil futures  rose.

The buzz

China remained in the spotlight, with news that the yuan was fixed at the weakest level since 2008—and above the key 7 to the dollar level, at 7.0039—was greeted with relief .

Earnings season continues, with Viacom  topping earnings expectations while Zillow  fell after its results. After the close, Uber Technologies reports, while Uber rival Lyft late Wednesday . Jobless-claims.

The chart

Analysts at Barclays point out that, given the U.S. trade deficit with China, yuan depreciation actually helps U.S. corporate earnings. Combined with devaluation, the drag on earnings for S&P 500 companies from the 10% tariff Trump plans to impose is just 0.8%, though it’s worse for some sectors like consumer discretionary and information technology.

The tweet

The ultimate Rorschach test is guns—, while households who didn’t overwhelmingly voted for Hillary Clinton—and this tweet of a well-armed coffee shop patron drew a ton of responses.

Random reads

Twitter   locked the account of Senate Majority Leader Mitch McConnell — .

Britain’s Royal Mintor two-pence coins, for the first time in decades.

Outspoken quarterback Colin Kaepernick, though no NFL team has made the call.

“Squawkzilla”—has been discovered in New Zealand.

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