Mike’s Morning Brief – December 14, 2016

Mike’s Morning Brief: A fast-break rundown of what’s going on.

Market opened flattish ahead of the final Fed meeting of the year.  DOW 20K is just inches away.  It’s only been 14 days since the DOW was at 19K.  The fastest 1,000 point move on the DOW came in 1999, when it went from 10K to 11K in 24 days.  Obviously, in percentage terms the moves are much different, with the 1999 surge tallying 10% and leading to a bursting of the internet bubble.  This move has very little similarities, although optimism sure has grown with the gains.  Sentiment was in the dumpster around the election.

A rate hike is coming, and everyone knows it.  Interest rates are actually lower in early trading, as a bit of a blow off top after the 10-Year Treasury yield surged from 1.8% to 2.5% just since the election.  Financial stocks, the biggest beneficiaries of higher rates, are taking a breather after monster gains.  Bonds have had a tough go.  Importantly, interest rates are rising for the right reasons.  The US economy has accelerated.  Earnings and revenue growth have returned.  Consumer spending has picked up for the holidays, which is key as the Consumer represents 70% of the US economy.  It’s all really healthy.  The November Retail sales report surprised a little on the downside, but shouldn’t derail the consumption theme.

Silicon Valley executives make their way to Trump Tower today.  Tech leaders will be meeting with the President-elect to discuss jobs, trade and the future of innovation and the US economy.  It should be a fascinating meeting because there has been a great deal of distrust and contention. Tech stocks showed some life again yesterday, after basically taking this rally off.  Tech and Health Care participation are the only missing ingredients for a full-blown broad based Market rally.  Tech is leading again in early trading, and Health Care is showing signs of life.  Sector rotation continues.

Have a great day,


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