Mike’s Morning Brief – December 13, 2017

Mike Frazier portrait headshot

Market opens in the green again, looking for its 5th straight day of gains for the DOW and S&P. The DOW was up over 100 points yesterday, but the gains were almost exclusively attributed to just 2 stocks: Boeing and Goldman Sachs. The tech-heavy NAS and small-cap R2K actually closed in the red. The Fed winds up its final meeting of the year and another rate hike is expected. Democrats scored a big victory in Alabama last night. Republicans lost Attorney General Jeff Sessions Senate seat in the special election which now has the mix 51 Republican and 49 Democrats. It is the first time in 25 years that Alabama elected a Democrat to the Senate. This sets up what should be a very contested midyear elections in 2018. Political divided continues to widen. The shift isn’t expected to impact the tax plan that is moving through Congress. There have been some more tweaks made on the Bill, which now reportedly has the Corporate rate at 21%, higher than the 20% that the Trump administration said was not negotiable. It also has the top bracket coming down from 39.6% to 37%. The likelihood of this Bill being passed this year keeps increasing. The Market likes it. Oil continues its march higher as WTI hits $58 while Brent cleared $65 for the first time in 2 years. The global economic expansion is driving increasing demand for energy. It has also been driving inflation for the first time in years. It will be interesting to see how the Fed frames their outlook for inflation. CPI rose 0.4% month over month and 1.7% year-over-year. The increase was driven by higher energy prices. Interest rates are ticking down ahead of the Fed meeting, with the 10-Year Treasury yield back below 2.4%, an important level of resistance this year. Are we closer to having direct talks with North Korea? Secretary of State Rex Tillerson suggests its possible.

Have a great morning,

Mike Frazier

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