Mike’s Morning Brief – November 28, 2018

What’s going on in the world…

Market opens higher as this oversold rally catches more momentum. This has been an important week. After just getting hammered during the traditional bullish holiday week of Thanksgiving, things were looking very bleak. But Monday brought a pretty explosive rally, and closed at the highs. Tuesday saw losses, which at one point cut 2/3 of Monday’s gains. But throughout the course of the day, the losses kept eroding. Buyers stepped in and Tuesday saw the DOW and S&P close at the highs again. This morning, stocks are yet again higher in early trading. Is the selloff over and a year-end rally upon us? Maybe. It feels like it. Things were way oversold, but you could argue there was no capitulative price action. It sure felt like it though. But there are 2 major events ahead of us this week which will be Market moving, and could easily send stocks sharply lower and higher. Fed Chairman Jerome Powell is giving a speech with Q&A today at 9am. President Trump has been very critical of the Fed Chairman’s rate hikes and now him personally. It’s a really tough spot. Then this weekend is the much anticipated meeting between Presidents Trump and Xi in Argentina. The words are sparring ahead of the meeting, but it just feels like the meeting will prove productive. At this stage, both Presidents have got to realize that this cannot continue because both nations and the world are at risk of suffering so much economic pain. But the existing trade imbalances and stealing of Intellectual Property has got to be addressed too. A deal won’t likely get done, but a path to a deal could develop, which the Market will take kindly. Earnings are wrapping up with the same mixed tone. Nutanix is jumping off a Q3 beat while Tiffany is getting hit from a miss. Tiffany said it has definitely felt the trade war with declines in China. Interest rates are a tick higher ahead of Powell’s speech. Crude prices are lower, but Energy stocks are holding in ok in early trading. The S&P is back near 2700 and the DOW is pushing 25K. They’re both back in the green for 2018. Will it continue into year-end? We think so, but anything can happen. We know that all too well. Keep those belts buckled.

Have a great morning,

Mike Frazier

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