Mike’s Morning Brief – February 19, 2020

Mike Frazier portrait headshot

What’s going on in the world…

Market opens higher as the DOW and S&P erase yesterday’s losses as fears of the coronavirus and the slowdown, economically and with earnings, continue to evaporate. The Dow posted a third straight day of losses, but the Nasdaq finished at a record high. Apple’s bombshell news could very well be the tip of the iceberg for supply chains and global growth. But the Market seems to be completely ignoring it. The Fed Minutes get circulated today, chronicling their January meeting. Attention will be focused on the massive injection into the Repo market, taking the Fed balance sheet back to crisis levels as well as the possibility of another rate cut. Gold has had a stealth move, punching through $1600 yesterday for the first time since 2013. It’s already up 5% in just seven weeks of 2020. Oil is higher after closing flat yesterday, erasing the intraday losses. Crude sits near the highest levels in more than two weeks. Oil is following global risk assets higher, driven by some coronavirus optimism. New coronavirus cases are down for the second straight day and the lowest daily increase since the end of January. But over 2,000 people have died, the vast majority in China. Reports also said that Chinese coastal manufacturing hubs have started loosening curbs on movement of people and traffic, while Bloomberg reported that China is considering some stimulus measures including direct cash infusions to the airlines to offset the decline in travel. Direct cash infusions… China also kicked out three Wall Street Journal reporters for articles they apparently didn’t even write. It’s a continued reminder that free speech and China don’t get along. The Democrats have another debate tonight, this one in Nevada, where Bernie Sanders is stretching his lead. Mayor Mike Bloomberg will make his debut on the debate stage. He is certainly going to be a target. Speaking of targets, the EU is set to roll out its digital strategy, which is directed at the Silicon Valley titans that are considered to have monopolistic characteristics. The Stock and the Bond Market continue to tell completely different stories. The yield curve is again inverted in the front end. The 30-Year Treasury undercut 2% yesterday, but closed slightly above it. Rates are barely budging this morning as stocks go higher. The Bond Market does not believe in this stock euphoria. Hang on. It’s going to be a bumpy ride ahead.

Have a great morning,

Mike Frazier

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