Market opens flattish to begin a new week, after closing at fresh all-time highs. The DOW hit 28K for the first time, with a fast break forward in the final minutes on Friday to reach the round milestone. Interestingly, interest rates did not rally, backing off the highs from the previous week. Stocks are giving some of the gains up as optimism on trade apparently has cooled. This has been a theme all along in this Trade War, on again, off again. It’s being reported that China does not believe they can come to terms in a deal with President Trump. This comes after positive comments from White House staffers over the weekend who said the phase 1 deal talks are coming along nicely. The Chinese said overnight say they are now pessimistic about a deal and will continue to talk and wait, whatever that means. Tariffs apparently are not going to be rolled back. China has already cut rates, seemingly in advance of a more contentious environment. But the Stock Market has remained so very resilient in the face of so much uncertainty. It still is. The Saudi’s are still planning to IPO Saudi Aramco, but at a much lower valuation than previously anticipated. Friday, the VIX closed at 12.05 (lowest close since April), and it’s now been nearly five weeks since the S&P had an intraday move of 1% or more. The Volatility index has been showing basically no fear. Generally, when that happens, a major selloff follows. But the VIX has stayed at these lows for a number of weeks now as stocks rallied. The VIX is back above 13 this morning though. Stocks are lower in early trading. Interest rates are lower too, sending Bond prices higher. Health Care is a standout leader in early trading. Gold is catching a bid, an inverse theme that’s been in place most of the year. Gold goes higher in a risk offsetting when stocks are lower. Oil is lower as is the Dollar. Earnings Season is nearly complete. The year-end push is upon us.
Have a great morning,
Mike Frazier
