Led by financial and healthcare, equity markets declined the most in a month.  Throughout the day many were asking what the possible catalyst is for the decline given positive movement on trade.  Some speculated it was the inability of the S & P 500 to definitively broach 2,800.  Others stating it was the proverbial “buy on rumor and sell on fact” scenario.  While others believe it was the beginning of yet another change in monetary policy assumptions.

Many have argued slowing trade will negatively impact the economy, specifically in the technology arena.

As widely discussed the initial print of fourth quarter GDP was considerably greater than expected.   Will a trade deal ensure continued growth?

The February and December 2018 market selloff were the result of stronger than expected growth that upended monetary policy assumptions.  Is this occurring yet again?

Treasuries however dropped in yield, the inverse of the expected action if indeed the equity selloff was the result of a change in monetary policy.  Could I argue the declining yields were the result of a partial flight to quality?  Perhaps given the vast majority of trading activity is dictated by non-dimensional trading models.

What will happen today?

Last night the foreign markets were mixed.   London was up 0.26%, Paris down 0.22% and Frankfurt down 0.21%.  China was up 0.88%,  Japan down 0.44%  and Hang Sang up 0.01%.

The Dow should open mixed on trade speculation, tax cuts in China and global political uncertainty.  The 10-year is off 4/32 to yield 2.74%.

The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. The material provided in Daily Market Commentaries or on this website should be used for informational purposes only and in no way should be relied upon for financial advice. Please be sure to consult your own financial advisor when making decisions regarding your financial management. Members of FINRA and SIPC, Capitol Securities Management is a privately owned full-service retail brokerage and investment advisory firm headquartered in Richmond, Virginia. For nearly 30 years, we have been serving the needs of our investors. Today, more than 200 Capitol Securities Management investment professionals and support staff serve approximately 18,000 customer accounts from Southern Florida to the New England coast.