Mike’s Morning Brief – December 6, 2017

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Market opens flattish as the rotation continues and money has been flowing out of stocks in general this week. It’s been more pronounced overseas, and it proves that stocks do not go up forever. Tech has been the weakest the last few days. We could be looking at the Bitcoin topping process where the parabolic move for the crypto-currency has caught the attention of pretty much everyone at this point and investors late to the party will feel a lot of pain and most likely soon. The Bitcoin mania has helped trigger an explosive extension of the rally in semiconductors, who have had a monster year but a tough week. This could be a sign of things to come in 2018. The recent rotation from Tech into Financials continued and Consumer stocks have caught another bid as did Energy. Both of those sectors have struggled for much of the year. The new year might be kinder to Consumer and Energy stocks. Congress continues to work on the merger of the Senate and House tax bills and the process will take time. Capitol Hill saw a large group of protestors trying to impede the progress of the plan. There are a lot of people that do not like and will not benefit from this tax bill. Many of them live in New York, New Jersey and California. Paying for it is controversial too. There is a wide moat between supporters and opponents of the tax plan. But Corporate America likes it, which is what helped bid up stocks for the monster run in November. President Trump plans to officially recognize Jerusalem as the Capitol of Israel, something that is expected to rile many in the Middle East. Yesterday, Japan announced it was building up its defense system and today South Korea is following suit. North Korea has been warned. Global Markets are largely in the red overnight, while Oil and Gold are lower too. Interest rates have a downtick which means money is flowing back into Bonds. It’s a risk-off day at the open. Is this the beginning of the necessary shakeout which will provide a bit of a mean-reversion from the relentless Bull rally? We shall see. There are many cross-currents under the surface of this Market and the speed has accelerated below.

Have a great morning,

Mike Frazier

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