Monday – September 23, 2019

Market opens lower to begin the new week. It’s also the first week of Fall. Stocks fell towards the close on Friday as news hit that the Chinese delegation canceled its trip to visit farmers in Montana. The implication was they are pulling back from wanting to do a deal. That might or might not be the case. Trump said he doesn’t want a partial deal and doesn’t need to do a deal before the election. Low end talks continue. There continues to be guarded optimism on the topic of trade. The August volatility gave way to a meandering moving month in September, with the S&P and DOW both stuck below the all-time highs reached in July. Earnings Season is still a couple weeks away, but economic data overseas keeps getting worse. Eurozone manufacturing PMI fell to 45.6 vs 47.3 forecast, continued weakness. Below 50 means contraction. Services PMI was also weaker than expected at 52.0 while composite PMI fell to 50.4. German manufacturing PMI dropped sharply to 41.4 vs 44.0 forecast. Services PMI was also weak. PMI data was weak across the board in France as well. German factory activity is the weakest since the Financial Crisis. Germany is Europe’s growth engine. Its growth has deteriorated swiftly raising concerns for the rest of the world. Germany is already facing recessionary pressures. European stocks are weak this morning with concerns about growth surging after another round of weak PMI data. The DAX is leading lower down over 1%. China was in the red overnight. Hong Kong is down four straight days. It’s being reported that it is going to take much longer to get the Saudi oil facility back online than previously thought. The attacks will be at the top of the list for discussion at the United Nations this week. There still has been no response and it is increasingly looking like Iran is responsible. Houthi militants in Yemen have warned Iran is preparing follow-up attacks in Saudi Arabia, though some concerns about credibility. Trump said he would not meet with Iranian officials at the UN this week. Another topic for discussion will be Trump conversations with Ukraine and whether he was seeking help from a foreign entity for the election. Here we go again? Nothing new on Brexit, but a deal between the US and the UK could be in the offing, which will help cushion a hard exit from the EU. Travel company Thomas Cook abruptly shut down its operation, leaving hundreds of thousands of travelers around the globe stranded. Interest rates are falling precipitously in early trading, as the 10-year Treasury yield is back below 1.7%. It hit a high of 1.9% ten days ago after freefalling to 1.4% in August. The Bond Market doesn’t normally move this fast. These are not normal times. The Dollar is higher. Oil is higher. Gold is higher. Stocks are slightly lower. Keep those belts buckled.

Have a great morning,

Mike Frazier

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