Tepid resilience characterizes a market that on the surface is as calm as the seas here in the Canary Islands, where I'll essentially wrap up my trip. I say 'essentially' as the plan is to return via Barcelona, which now faces new strict discipline, as the central government here in Spain is determined not to allow the referendum on Catalan independence intended for October 1.

It may not be reported in the American press, but (unlike my thought to send a flotilla of cruise ships to shelter respondents to Puerto Rico's earthquake), it's being reported that Madrid sent the 'Rhapsody' (a large cruise ship) and has prepared to commandeer ferry boats, to augment their Federal Police presence around Barcelona, where Spain has already arrested a number of officials in their effort to squelch the entire referendum vote days after I'll be briefly in Barcelona. I may get a closer chance to observe it than expected; and am unsure what this challenge means to the EU, Spain or markets.

Meanwhile Thursday began with the US President outlining strong financial restrictions on entities doing business with North Korea, while the significant part of his remarks was the reference to China 'ordering' its banks to curtail their activities with North Korea. It's unclear to what extent that strikes them, but sure is welcomed as an affirmation of our view that the U.S. and China, perhaps reluctantly on Beijing's part, are working together to somehow rein Rocketman in a bit more. It remains one of the 'circling black swans', while it is clear the U.S. and China are doing everything to avert open warfare.

Of course the market is grabbing onto the Fed stating it's doing no more or less than intended for months with respect to trimming their bloated Balance Sheet this Fall, with the increased prospect of one more small rate hike this year. Odds have favored that for some time. The market wants to fallupon the Fed's sword as a causal factor; whereas internally stocks have been just a bit skittish for some time, with rotational corrections internally; while some of the biggest stocks holding-up the Senior Indexes were looking tired (sure, Apple came to mind as the rebound in big Oils slightly masked that fatigue).

There are a few exogenous events impacting markets too. For instance the 'latest' admission from Equifax (EFX) that they 'accidentally' directed 200,000 just looking to protect their privacy to a fake phishing website is an unneeded as well as further embarrassment to what already is a huge corporate hack that goes beyond a Public Relations fiasco for them, given real privacy breaches that took place. This doesn't help consumer confidence in online finances at best, and at worst actually results in gargantuan problems that could have a general market impact where the stolen details really to see widespread use over time.

There remains scant details about that aspect, despite knowledge of all this being out there for a couple weeks. The company's head of cyber-security having no background in the field (incredible) and the firm's hasty attempt to scrub her social media pages to conceal such details; plus combined selling of shares before the hack was revealed to the public (but known within that firm), is incredulous and now the basis of multiple litigation efforts.

In sum: while signs of market turbulence are barely ruffling feathers as yet, there remains an overdue environment justifying corrective market actioThe stretched resources needed to cope with the multiple natural disasters is another issue too; that ultimately can create a reconstruction boom (Texas in particular, Florida mostly, but with limitations on elevation-challenged area reevaluation perhaps) lasting years, and the market knows this. Financing it is another story; and that is doubly so when it comes to Puerto Rico. Sure it is the human toll everyone's focused on first and foremost; but even that is a bit difficult to cope with; given the logistics to the island and the nearly total absence of power on the island, as day one has seen very little restoration.

On top of it all; Mexico had another earthquake today, far enough from the epicenter of the first one (and larger magnitude) that's a separate event not an aftershock. All of that is a reminder that it's along the 'ring of fire' which is a bit more active on the US West Coast too; after the 3.4 or so temblor that hit under Westwood in Los Angeles. Traveling with San Francisco friends it is a reminder of earthquake preparedness. And nobody seems concerned about the Cascadia Rift offshore Washington, Oregon and British Columbia.

Bottom line:

We remain biased toward overdue decline; toward feeble and unsuccessful efforts to sustain strength over S&P 2500; and late month and October risk rising; especially as technical support levels are challenged. Oil strength will be unlikely to sustain the market, even if Banks hold up a bit. In the tech sector, Apple remains defensive as well. Not a surprise. Few talk of Apple's challenges in-light of marketing challenges in China, not merely the ho-hum reception to the warmed-over iPhone 7 known as iPhone 8. (X sure is the new phone; and will significantly help Q1 of 2018; though prices as we showed, are almost prohibitive outside of the United States market.)