Monday – December 30, 2019

By December 30, 2019 Dark and Early

Market opens flattish to begin the final week of 2019. The Dow and S&P 500 both closed at record highs Friday, and the S&P 500 is just 0.35% away from posting its best annual gain since 1997. The Nasdaq did see an 11-day win streak come to an end Friday, but it still leads the major averages with a yearly gain of nearly 36%. There are just two days left in the year, and the decade for that matter. Volume continues to be low, typical around the holidays. The strong year for stocks is pretty much locked in. The big question is really, what 2020 brings. The Phase 1 deal looks like it’s going to be signed as early as this week. There is room for confusion, apparently, as the Chinese have agreed in principle, but translation and legal scrubbing have yet to be completed. That doesn’t come as a surprise. There have been moving parts throughout the negotiation process in this trade war. North Korea is back in the news, making some cryptic comments with the year coming to an end. They want sanction relief and their biggest tool is nuclear weapons and saber-rattling is their preferred method to get attention. This is an issue that stabilized in 2019, but has certainly not gone away. It is looking as though it will return to the spotlight in 2020. The US carried out airstrikes against Iranian backed militia in Iraq and Syria. This is another issue which seems to be boiling a bit, and could be an issue next year. Oil extended its December rally to hit a 3-month high Monday, driven by upbeat expectations around the global economy as traders also kept an eye on developments in Iraq. WTI for February delivery rose 35 cents to $62.07 while March Brent was up 54 cents to $67.41. Stocks have turned red as I type. Bonds are lower too, with yields up. The Dollar is weak. Gold is higher. Oil is higher. Stocks have had a great year. Sellers have been absent in December. They have most likely pushed their focus out to the new tax year, which could bring a sell-off early in the new year. But the momentum has clearly been strong and upward moving.

Have a great morning,

Mike Frazier