E Market Briefing For Monday, August 14

Secular predictions for the very long-term, increasingly include nervous (after-the-fact of months of distribution) analysts confident that the highs are 'in' essentially for all eternity. Not only due I think that's a premature outlook, based on demographics and economic malaise, not merely war prospects; but it's likely an irresponsible overreaction to what's already happened, even if it were to prove valid down the road.

And not to sound a bullish note (which is also premature); but for a couple of days I've suspected 'back-channel' talk ongoing to try to mitigate actual risk of wide-open uncontrolled conflict between the United States and the rogue North Korean state. On Friday we got heard more scuttlebutt along that line; plus evidence of behind-the-scenes efforts likely being reviewed by Secretary of State Tillerson and UN Ambassador Haley. My earlier focus was a suspicion related to the Canadian Envoy in Beijing as the same time as North Korea's Foreign Minister; with suspicion they did not reach an accord; but tried. That indicates efforts (and those weren't likely the only ones) to avoid war.

Does that mean those who sold or shorted 'after' the week's earlier reversal and into weakness promulgated by the second round of barbs between the antagonists, or as the Volatility Index popped as we suspected anyway to be on this week's menu, were going to get run-in and spooked yet-again? Yup. 

Sure, we didn't get a Friday downside follow-through because of technicals; not a sudden peace overture, though we know a new proposal between China and Russia has been presented to North Korea which would trade security of their regime for a cessation of US/Allied 'exercises', though that's been an approach tried and failed before. 

However this time there is a scheduled South Korean / US exercise later in this month that coincides (actually started yesterday and expands next week to include almost all US Forces in South Korea) with North Korea's threat to fire 'near' Guam. If they do I'm pretty confident it is not a possibility, but is an 'obligation' and responsibility of commanders in both Japan and Guam to try intercepting any such missiles and destroy them; regardless of whether they carry a live warhead or not (no way to now pre-impact; so shoot them down) as they approach US airspace (or overfly the Japanese mainland). 

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