Mike’s Morning Brief – July 13, 2016

Market opened flattish this morning with both the DOW and S&P at new, at all-time highs.  The NAS, which has underperformed all year is back in the green for 2016.  It’s been a complete melt-up since the Brexit vote, which instantly sent shockwaves throughout the financial world.  The rally has caught most everyone by surprise.  At this stage, the S&P is not cheap and the 2016 and 2017 earnings estimates are pretty shaky.  Tensions remain high both at home and abroad.  The risks remain high but stocks keep climbing that preverbal wall of worry.  What’s clear is that stock markets around the globe have loved central bank support for years and we’re about to see more assistance.  Theresa May will become the new British Prime Minister today, replacing outgoing David Cameron.  This happened faster than expected, which is generally a good thing.  Will she invoke Article 50 which will officially start the Brexit process?  We shall see.  Germany sold its 10-Year Bond with a negative interest rate for the first time in history.  Oil supply and demand is back in balance for the first time in years.  Crude is giving up some of yesterday’s gains in early trading.  Interest rates are lower, with the 10-Year Treasury yield back below 1.5%.  Gold is up while the Dollar is down.  Earnings have just begun.  Trump is expected to announce his VP candidate Friday.  The political conventions are coming.  Buckle up, the Bull has regained control but the Bear has not given up.  The wild ride will continue.

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