Mike’s Morning Brief – April 25, 2018

Mike working on his computer

What’s going on in the world…

Market opened flattish this morning, but quickly turned red after a midday reversal yesterday saw stocks freefall before the close of trading. It is rarely bullish to see gains turn to losses with the DOW and S&P closing near the lows on the day. The DOW fell 424 points on 4/24. It was down north of 500 at the lows. Both the DOW and S&P are back in the red on the year. The Tech heavy NAS is still in the green. But Tech is finally showing some cracks. The correction is not over. We still see more downside ahead. Hitting 3% on the 10-Year Treasury yield seemed to trigger some algorithms which forced sales. It’s the highest level since 2014. The 10-Yr punched thru 3% this morning. We could see it hitting 3.3% in short order. Concerns are rising over higher borrowing costs for companies already facing rising commodity prices. The price of money is going up. Earnings have been very solid. The problem has been the outlooks, which have been mixed. Uncertainty around global trade and where things are headed in Syria, North Korea and Iran are weighing heavily on sentiment. The Dollar has been strengthening of late, which could put a dent in US exports. The Global Economy is growing nicely. But all of these issues threaten that growth. Despite the solid earnings reports, peak growth is likely this year. Slowing growth rates compress expensive stock markets. That’s what we’re dealing with. We remain in defense mode as a re-test of the lows still looks very likely. Keep those belts buckled.

Have a great morning,

Mike Frazier

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