Mike’s Morning Brief – December 4, 2019

What’s going on in the world…

Market opens in the green, trying to stem the tide of the 3-day decline. Trade remains the primary topic. It’s being reported that the US and China are moving closer to agreeing on the amount of tariffs that would be rolled back in a “Phase One” deal despite tensions persisting over Hong Kong and Xinjiang as seen earlier today. It has been a complete whipsaw situation on trade, really this whole time. Just yesterday, President Trump said that he actually thought it would be better to wait until after the election to cut a deal. Not 24 hours later talks are apparently improving. The public and investors are being played while back channel conversations are doing whatever they’re doing. Who knows. We’ve seen this for so long. And most importantly, the trade turmoil has had a negative impact on Corporate leaders and their confidence in investing for the future. With this uncertainty, capital expenditures have been cut if not frozen in some instances. It’s incredibly difficult to run a company in this environment. The British apparently plan to move forward with the digital tax on Silicon Valley, something that President Trump rejected yesterday when France made the threat. This is yet another complication of global trade. The Job Market has been super strong, with unemployment at 5-decade lows. But how long can this last? It’s almost as good as it gets. There are signs out there they have peaked. Only 67K private payroll jobs were created in November according to ADP, less than half the 150K expectation. That is a six month low. The non-farm payroll report, the real job number, comes on Friday. Crude is up today after the Iraqi oil minister Tuesday night supported deepening production cuts among OPEC and its allies by 0.4 million barrels a day. Energy stocks are catching a bid in early trade, leading the overall tape. Stocks are higher, chipping away at the losses from the last three days. Bonds are lower as yields rise. The Dollar is at a 1-month low while Gold takes a breather after three strong days. Gold continues to prove to be a good hedge. Keep those belts buckled. December has brought volatility.

Have a great morning,

Mike Frazier

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