Monday – September 30, 2019

Market opens higher on this final day of September. Q3 is coming to an end, setting up the finish to a volatile year with Q4. September saw a strong start, but is ending with back-to-back weekly decliners. The slowdown has accelerated while trade wars, politics and geopolitics have increased in activity and significance. The Sunday talk shows were all about impeachment, as was 60 Minutes. The impeachment inquiry almost certifies that Washington will remain combative and any chance of bipartisan deals are now next to none. China is taking the rest of the week off with its 70th anniversary celebration for the People’s Republic. Brexit keeps muddling along with no resolution in sight. With all that’s been going on, it’s actually impressive how the Market has held up so close to the all-time highs. It’s quite surprising. Demand for American assets remain strong. The Trump administration said it’s “not contemplating blocking Chinese companies from listing shares on US stock exchanges at this time,” after reports on Friday suggested otherwise. China official manufacturing PMI for September surprised to upside, but still contracted for 5th straight month. PBOC said it would step up counter-cyclical measures to help the Chinese economy. Japan industrial production contracted more than expected in August, though retail sales were better ahead of sales tax increase. German unemployment unexpectedly posted its first decline since April. ECB’s Draghi said fiscal policy support is more urgent than before. NY Fed’s Williams defended the handling of recent repo market pressures. This is still an issue that requires close scrutiny. If they’re having liquidity issues while things are in solid shape, like now, what happens when there’s more stress in the system? It’s a critical question without an answer right now. Stocks are higher while Bonds, Oil and Gold are lower. Interest rates are higher with the Dollar. Earnings Season is ahead. Keep those belts buckled. Anything can happen in this environment.

Have a great morning,

Mike Frazier

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