Equities fell for a myriad of reasons.  Technology stocks just posted their best six day stretch in 7 ½ years—up nearly 9%–fell about 1.5%. The reasons for the decline varied but a major catalyst were reports that Facebook was aware of privacy issues, did little about it and did not put compliance with the FTC order at the top of priorities. Other causes for the decline were trade tensions, profit concerns and potential regulation.

Speaking of profits, Morgan Stanley slashed its 2020 forecast to flat from a 5% expected gain, while reiterating its call of negative earnings growth for 2019. If this were to occur, it would be two consecutive years of flat/negative profit growth, the weakest stretch since the 2015-16 oil induced recession.

Morgan Stanley stated the change in their outlook was the result of trade but companies that relies upon domestic sales should do well…aka value.

Speaking of which, Bloomberg wrote yesterday based upon several generally accepted metrics the disparity between growth and value is now at an all-time high. I am ardent believer monies will gravitate to sectors that offer the greatest potential reward with lowest amount of potential risk. The question at hand is when. What will be the catalyst?

Unfortunately only history will answer the above questions.

What will happen today?

Last night the foreign markets were mixed. London was up 0.25%, Paris up 0.06% and Frankfurt up 0.61%. China was up 0.05%, Japan down 0.46%  and Hang Sang down 0.05%.

The Dow should open flat. Oil is surging on reports that several shipping attacks have occurred in the Gulf of Oman, the entrance way to the Straight of Hormuz. The 10-year is unchanged at 2.12%.


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.