Internal market slippage has been ongoing. The inability of S&P (key primary indicator of market action) to move forward after rising above the declining-tops pattern was not only anticipated; but forces analysts and a slew of money managers to deal with considerations of what comes next.

Generally they won't reflect on the preceding (first time this year) break of the S&P's 200-Day Moving Average; other than previously diminishing its importance, perhaps because of desires to calm investors concerns. That they valiantly used leverage to trigger short-covering comebacks, not only continued a string of requisite snap-backs expected in a 'ragged' Spring; but in this case was the most desperate 'Hail Mary' of the several thrusts.

Basically it looks exhausted. It's not moving much because of 'trade talks'; it is not impacted much by Middle East (or China-Taiwan) tensions; nor is it willing to accept that 'Emerging Markets' jitters and economic slippage in a sense relate to EM FX liquidity drying-up; and is clearly a part of why the Dollar has been stable-to-firm as we've called for months.

This 'Bull/Bear' (strange combined animal) struggle isn't the only matter at hand as many thing (extension of market move versus a decline); since of course aside the near-to-intermediate term, one should ponder whether a bigger concern is simmering out there; but not yet at a 'boiling point'.

That means all the chatter about buying or not buying or technical levels in the near-term, could mask a macro concern we've noted by mostly not emphasized, as far as how some might try to counter it; and that's global Debt; not just our domestic debt issues that are frequently topical.  

Russia and Iran (possibly China) discussing oil transactions in Euro rather than Dollars could relate to this; but really is a function of recent slippage, which we forecast for FX currencies; and their desire to circumvent risk of capital being tied-up due to sanctions; if they trade 'other than in Dollars'.  

I nevertheless wonder if some other approaches are attempts to fend-off a slew of risks (might even relate to the hiding and corruption aspects of cryptocurrencies hoping they won't suffer fates similar to oft-depreciating currencies in a crisis; though they already did plunge as expected earlier this year and a bit more recently; and actually are far more volatile even if appealing to the underworld, cartels, and dictators of the world to conceal illicit funds). But I digress.

The point is that some sort of Emerging Market debt default is a risk over the coming year or so; and must be monitored. Notice I didn't mention the US Debt picture in this context. As risky as our ballooning debt is relative to growth; it's nowhere near the worst levels (no big US infrastructure Bill at-hand unfortunately.. and that too is a restraint on markets going forward relative to many earnings areas as a return to somewhat status-quo seems to exist among politicians).  

Risky as it is; U.S. debt-to-GDP ratios and so on, do not approach what's so evident overseas. And if we get a global crisis the Dollar might not fold as so many pundits call for; but spike higher at that time; and lending on a broad front might be curtailed sharply; regardless of prevailing loan rates.  

A resulting political and market backlash would be part of the woes; with a dramatic reversal of investor mood, which really isn't quite exuberant now despite the 'hold the course' admonitions and grossly overoptimistic stock market rationalizations. But this is for the future and we think strong Dollar action is just a hint of what may be lurking 'around the bend'. Incidentally, if it does occur, it's not necessarily bearish for the United States aside the immediate market reaction. Our posture beyond crisis might brighten. 

In sum: what this boils down to for now, is a market still 'fighting the Fed' (regardless of domestic debates about growth versus mild sluggishness); viewing trade as well as tariff talk of disappointment or concessions, with actually sober skepticism of alternating 'stories' involving China; because most accept it as part of negotiating, or efforts to reach some 'face-saving' deal for the two sides. Ultimately we'd expect uninspiring but acceptable resolutions. 

The same might be said about North Korean talks; with the US and South Korea cancelling portions of Air Force exercises as a gesture, mostly to calm North Korean fearful tirades suggesting greater concern. It really is essential that North Korea not constantly make assumptions of 'risk' in having the agreements; or things will encounter serious difficulties later.

As for credit-markets, they are sufficiently calm to foster equity neutrality with respect to funds shifting between stocks and bonds; but really we're at a level where (for the most conservative) competition is returning. From a total return perspective, we prefer a blended approach; primarily looking at market risk and being prepared to buy bargains gradually as they tend to appear, sometimes on a rotational basis.