Mike’s Morning Brief – July 10, 2019

What’s going on in the world…

Market opens higher as Fed Chair Jerome Powell indicates his openness to an interest rate cut, which makes a ¼ point cut at the July meeting a done deal. That would effectively reverse the rate hike in December that led to so much damage. But clearly, the Q4 2018 losses have been erased in 2019. But there are many signs of topping and overvaluation. As economic growth slows and trade tensions linger, the Fed appears ready to act in defense and provide support and liquidity. Bad news has become good news for the Market. The question is how bad will things get? Earnings Season will be a big tell, which begins in earnest next week. It’s being reported that American and Chinese trade officials held “constructive” phone talks on Tuesday, while the U.S. government said it will also issue licenses to companies seeking to sell goods to China’s Huawei where there is no threat to national security. Is that optimism for a deal? It’s also being reported that President Xi did not agree to buy more American agriculture when he met with President Trump in Japan. Through the first half of the year, Microsoft and the so-called FAANG stocks of Facebook, Amazon.com, Apple, Netflix and Google parent Alphabet accounted for 20.5% of the S&P 500’s total return, according to S&P Dow Jones Indices. S&P 3K is back in reach. DOW 27K is too. Stocks are higher. Oil is too. Interest rates are flat and the Dollar is lower. Gold is catching a bid too. In this environment, anything can happen. It’s going to be an eventful day. It’s all about the Fed.

Have a great morning,

Mike Frazier