Mike’s Morning Brief – August 15, 2018

What’s going on in the world…

Market opens sharply lower as the volatile price action continues with a new, downward bias. Resistance was reached in spitting distance from the all-time highs reached in January. The S&P approached that level last week, and has seen a lot of downward price action since. This is generally normal back and filling after an impressive July run. But with so many risks percolating and much of the positives already priced in, it begs the question as to whether further downside is ahead. Seasonality plays a role as well, with August and September historically the worst months for stocks. Global Markets were largely in the red overnight. The Dollar continues its strength against pretty much every global currency. That’s been a theme too. Ultimately, the strong Dollar will begin eating away at exports and foreign sales. That will have a negative impact on stocks. But interestingly, money is not flowing into the Bond Market this morning. Interest rates are falling. The 10-Year Treasury yield is down to 2.85%. Some believe the Fed will now not make its 4th hike this year because of these international issues. There were 2 deals in the Permian Basin of West Texas yesterday, implying good, long-term value in the space. Crude oil is weaker again as is Gold. Bitcoin hit a new low yesterday at $6K. There has been a bit of a correlation to stocks the last 18 months or so. Bitcoin topped out $19K in December, its all-time high, a month before stocks did. It’s a relationship to keep an eye on. There’s no clear safe haven today, other than cash. Turkey is launching a protest on Apple devices as part of its response to increased American pressure. Turkey and trade tensions are the theme again today. Keep those belts buckled.

Have a great morning,

Mike Frazier

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