Mike’s Morning Brief: A fast-break rundown of what’s going on.
Market opens in the green with just 3 trading days left in Q3. The S&P is back above 2500. Price action has been active but conviction has not. Buying the dip has been the theme for years and the same attempt has been in place in this recent stall. So far there has not been a 5% sell-off in 15 months. That’s a long time and not healthy. We think that changes, but most likely after the Qtr ends. Last minute window dressing will likely keep stocks elevated to October. But the news is not great around the world. Sharp words keep firing back and forth between the White House and North Korea, although the tone is apparently much different behind the scenes. The Republicans pulled the last-ditch attempt at a Health Care plan yesterday. They didn’t have the votes. Tax reform is next, but Republican leadership is very much in question as they have not been able to accomplish much of anything since taking power. And it probably will not consist of reform and more like cuts. Regardless, the Market has always liked the prospects for tax changes. The results last night in Alabama are another tell for the Republican Party. President Trump campaigned for a candidate that lost by a wide margin to an extreme right candidate backed by former Trump strategist Steve Bannon. The damage in Puerto Rico keeps mounting in the wake of Hurricane Maria, with over 40% of the population still without drinking water. The President announced he will visit the US territory sometime next week. Crude prices have been strong of late, sending Energy stocks running higher at the end of the Qtr. Rising rates this morning are sending Financials upward as well. Both have been laggards in 2017. This is a very positive development that could bring a more broad-based strength to the overall Market while Tech and Health Care take a breather. We still think October brings more volatile price action and the Correction is not yet over.
Have a great morning,
Mike Frazier
