Mike’s Morning Brief – May 22, 2019

What’s going on in the world…

Market opens lower, giving up much of yesterday’s gains as the volatile price action continues. The Trade War remains issue #1. Retailers are showing how challenging this environment is and how consumers are tightening their wallets. Growth is slowing which is putting downside pressure on stocks. Expectations got a little high. They’ve come down quite a bit. Global markets were mixed with a downward bias overnight. Futures sunk a little further when Treasury Secretary Steve Mnuchin said there’s no scheduled trip to Beijing on the calendar. China’s ambassador to the US said Beijing is prepared to resume trade talks, though nothing is scheduled following potential signals from President Xi yesterday that China is preparing for protracted trade battle. Outside of US-China tensions, there continue to be some better headlines on prospects for Congress to approve a new NAFTA deal. Interest rates are sliding as money flows back into bonds. The Market continues to believe the Fed will cut rates. There is now a 70% probability that the Fed lowers rates before year-end. This is a stark change from 9 months ago, when the expectation was for 3 or 4 hikes in 2019. The Fed Minutes from the April meeting get released later today. The Global Economy is slowing and the Trade War seems to be tipping the scales. This very well may be Theresa May’s final act as Prime Minister. Oil is lower. Gold is flat. It’s going to be another busy day.

Have a great morning,

Mike Frazier