Market opens mixed with the S&P and NAS lifting higher while the DOW continues to be dragged down by Boeing. The S&P is back to levels last seen in early November, having broken through the 2800 resistance. The pattern of up with reckless abandon continues. Stocks have charged higher in 2019 just as quickly as they fell to end 2018. It’s come without any clarity on the major issues that have been plaguing growth around the world, namely Brexit and the War on Trade. Brexit looks increasingly likely for a delay, with uncertainty the main theme. Talks on trade with China continue without tangible traction and the much-anticipated summit between Presidents Trump and Xi now reportedly being pushed out to June. The biggest driver has been undoubtedly the Fed. Growth is slowing and with inflation stuck below 2%, the Fed has made it clear it plans to slow too, providing significant cover and a backstop for stocks. The Fed meets this week, with no move expected at this time. The next move being priced-in is a cut, not a hike. We will learn more later this week. Also, a headscratcher is the fact that the VIX continues to slide despite these growing global risks. The last time the VIX was down at this level, below 13, was September 24. That was the date the Stock Market topped, before the massive sell-off. That is certainly a contrarian indicator. Investor sentiment has gotten quite complacent. Also boosting investor optimism perhaps is the LYFT IPO roadshow, beginning this week. The Dollar is weaker, while Oil and interest rates are ticking higher.
Have a great morning,
Mike Frazier
