Mike’s Morning Brief – March 28, 2018

Mike working on his computer

What’s going on in the world…

Market opened mixed after a major reversal yesterday saw gains turn to losses, with the close at the lows. It was pretty violent price action. Tech was hit the hardest, which is the new factor in this correction. Tech was impenetrable from declines before. Not so much anymore. What goes up, must come down. Tech has been a high-flying theme for investors, pretty much in one direction. That direction has reversed. Amazon finally cracked. The correction continues. Money flowed into Bonds again yesterday, taking interest rates lower. The 10-Year Treasury couldn’t get thru that 3% resistance level. It’s back to a 2.7% yield. The US economy grew faster in Q4 than previously thought. GDP was revised higher, just under 3% growth. The economy remains in solid shape. Rumors are circulating that North Korea is willing to discuss a denuclearization of the Korean peninsula. That comes with tremendous skepticism. US Treasury will hold its biggest bond auction in 10 years this week. Rates are still historically low, and allows for cheap refinancing. Debt will become a big issue, and perhaps the one that finally puts this Bull Market to bed. There’s a lot of it. The ability to finance gets much more difficult as rates rise. The Market has ways of sniffing this out. Health Care is a bright spot this morning. Consumer stocks are too. Lululemon reported a strong Qtr yesterday which has the stock soaring this morning. Crude and Gold are lower in early trading. Whipsaw price action remains the theme. Keep those belts buckled. Q1 ends tomorrow.

Have a great morning,

Mike Frazier

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