Micron (MU) earnings beat, and its solid guidance lifted the stock after the close, and the rest of the chip sector is looking to come along for the ride. 

The company is committing up to $8.0 billion on capex.

Semiconductors’ wild swings have been worth the ride:

• 5 Day +3.5%
• YTD +58%
• 5 Years +96%

Yield Curve Steepens

Don’t look now, but the ten-year yield climbed to 1.94% overnight. Now, the spread with the two year is 30 basis points.   There are several implications, and over the next few days, we will hear all kinds of interpretations of this move, especially once the ten-year closes above 2.0%. 

One story will mention more competition for stocks for yield-seeking investors. Outflows from bonds in general probably finds a home in equities.  

This is building into a big story, factoring for economic and stock market models.

The Philly Fed manufacturing report came in less than expected, although most of the individual categories actually improved month-to-month.  Moreover, expectations remain elevated, which bodes well for 2020.

The market paused yesterday, but it does that from time to time, even more so after monster rallies.

Portfolio Approach