Monday – October 21, 2019

Market opens in the green to start the new week. It’s going to be a busy one for earnings, with over 20% of S&P companies set to report. Earnings Season provides the opportunity four times per year for the Market to focus on facts pertaining to Corporate America. It’s the Qtly report card, which measures the true performance and underlying strength. Growth is slowing. The question is how much and how much longer. We will learn a lot this week. So far, 83% of the S&P 500 results have beat consensus EPS. Trade headlines are generally upbeat as Chinese Vice Premier Liu He said Saturday that the US and China have made substantial progress in many aspects of the trade agreement. However, there are still some big (non-trade) complications. Vice President Pence will deliver his second policy speech on China this week as China eyes Congressional support for legislation in support of pro-democracy protestors in Hong Kong. Larry Kudlow said the December tariffs might get delayed now. The Market always likes statements like that. The Washington Post said risk of another government shutdown is growing. It was looking like a Brexit deal might happen by Halloween, but PM Johnson’s bid to hold a meaningful vote on his Brexit deal suffered a setback on Saturday as MPs backed an amendment to withhold support until it has passed into law. It’s looking more likely that the Brexit can gets kicked down the road again. Japan is considering more stimulus measures for its sluggish economy since negative interest rates aren’t doing it. More monetary medicine in extreme prescriptions. Medicine used in extreme is poison. Stocks are higher. Bonds are lower, with higher rates. Gold and Oil are flattish while the Dollar shows more weakness. The VIX is back down to 14, back towards the lows of the year. Something big is setting up.

Have a great morning,

Mike Frazier

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