E Market Briefing For Monday, August 14

Thus the coming week is not entirely bereft of possibilities; and that's likely a reason for the 'locked and loaded' comment from the President; basically a way of conveying to Pyongyang that they will be intercepted if they launch. 

So my point is several-fold: first of all I do not presume a major war is upon us; but if it is; it will be an attack by North Korea; not a preemptive US strike. China's comment that 'no regime change' will be permitted sends a note of its own of course; mitigated (nice straddle) by saying they'd be neutral if the North Koreans attacked the United States 'first' and the US retaliated.

Bottom line

My original forecast has been for a significant correction likely; but not necessarily a catastrophic decline. There's no change in that view. In fact we could get a sharp short-term relief rally should it be shown that some sort of 'tense peace' is perpetuated for now with the unruly communists. 

For now you simply got a rebound off the short-term rising-bottom trend-line; the edge of the crater as I described it. Everyone assumes a diplomatic sort of solution; and even if it's not, provided nuclear war is averted, markets for that matter might rally not decline, just having the tension abated either way.

Now; the idea that we're not necessarily out of the long-term secular market structure hinges on domestic issues such as 'tax-reform' and suddenly calm discussions about such things as Healthcare and Infrastructure. There is a 'credit unwind' risk; and if something like that strikes, then yes, you have lots more of a secular risk than that of a correction. 

I'm aware of both variations of what can happen on the downside soon, and interestingly those are separate from the obvious impact of a conflagration. I also am pleased that one or two media outlets 'finally' noted that the North Koreans tempered their threats with a note that plans would be presented to the leader, not that they would attack at mid-month. That caveat was mostly redacted from most of the media; seeking to alarm people excessively. The President also ignored those caveats publicly; but privately knows that well. That's why he also then tweets he hopes they find the 'path' via negotiation.

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