What’s going on in the world…
Market opened lower for the second straight day, but reversed higher in short order. Yesterday’s selloff was the worst day in May for stocks. The month has been strong. But the winds have changed again. North Korea has returned to a top risk while economic data is showing some slowing overseas. North Korea is threatening to cancel the summit with President Trump, due to continued military testing on the Korean peninsula. This after the US pulled out of the Iran Deal. Geopolitics are back at the top of the headlines. Prospects for a NAFTA deal seem to be shrinking by the day. Japan’s economy is shrinking again. These are reversals from the positive developments in recent weeks. They helped trigger the May rally. Interest rates helped put a dent in stocks yesterday, with the 10-Year hitting multi-year highs above 3%. They’re backing off a bit in early trading, but holding 3%. Crude prices remain elevated as well with some of these new geopolitical concerns threatening supplies. WTI is $71, a level not seen since 2014. The IEA clipped its forecast for global demand based on the elevated price. Oil still matters. Tech is showing more signs of weakness, as the breadth in certain stocks is shrinking. At this point, after 2 years of going straight up, who doesn’t already own Tech? Who doesn’t own Apple? Who doesn’t own Amazon? There is a shortage of new buyers and a massive herd of potential sellers. Scales get tipped in these situations, it’s just a question of when.
Have a great morning,