There is a fair amount of activity outside the markets in the early going on this St. Patty’s day. To start, as usual, there is the latest out of Washington which includes Trump’s meeting with Angela Merkel and Secretary of State Rex Tillerson’s comments about military action against North Korea being “on the table.” In addition, Treasury Secretary Steven Mnuchin is making headlines for the stance on countries that devalue their currencies in order to gain an edge in trade.
Next up, there is the latest on the BREXIT. U.K. Prime Minister Theresa May is walking a tight rope right now in promoting that Britain “take back control” while encouraging the Scots to stay in their seats. Today, May will give a speech detailing her “plan for Britain” – should be interesting.
And then there is oil. While stocks rallied on Wednesday in response to the idea of the Fed staying on course (and maybe even fighting some inflation along the way), stocks struggled a bit on Thursday due in large part (in my opinion, of course) to oil’s decline. However, Saudi’s Energy Minister Khalid Al-Falih said this morning that OPEC could cut production further if global supply numbers remain above the five-year average. In response, crude futures are moving slightly higher so far this morning.
As for the market, stocks may be embarking on yet another sideways consolidation phase. Given that the pattern has been for stocks to rally, then pause for a couple months before resuming the march higher, this would seem to make sense here.
S&P 500 – Daily
So, until/unless something changes on the macro front, I would not be surprised to see this pattern continue and for the bears to remain frustrated. After all, it appears that sideways is the new down. Well, for now at least.
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