Reflationary impulses have been increasingly muted for months now; no surprise. Whether housing, autos, price-cutting, inventory bloats (like autos) or even mis-positioning by many hedge funds (who then played a catch-up game to get-into sectors benefiting from 'new American' focuses on growth) who generally have under-performed the Indexes.. any way one looks at it the sluggish economic conditions have been evident for months, while the optimism is based entirely on economic prospects.

Those prospects require 'enactment and implementation' of growth reforms, not just healthcare and tax-reform; those are at the heart of the matter. In that regard, President Trump's broad-ranging speech in Wisconsin really did more than push America's agenda; it showed renewed economic focus on growth where we need it, and in the long-run is a positive initiative. That it provided for emphasis on H1b expediting for the most-talented well-paid as opposed to lottery winners, was also a plus from an economic basis.  

Some of the 'impulse fade' started in commodities as China quietly modified its 'command' economy, even as superficial growth data looked impressive. Markets are normally not kind to managers who don't meet expectations; or in some case fail to achieve already-lowered forward guidance. While many are stunned by the Goldman Sachs results, might consider that's actually a logical expectation given the focus they have had (with lower IPO and LBO activity and so on). Not to mention the rush into Treasuries by those clients of the firm concerned about 'where to put' monies that keep showing up. (A movement of Treasuries is primarily the sluggish economy pressing rates at the same time flight-to-safety moves proliferate, as assets seek safe-harbor, with valuations so extended at least for the near-term.)

For months we've pointed-out that guidance was lowered, so missing such levels would be 'even worse' for earnings season, while the market's normal exhaustion of seasonal reinvestment funds also contributes to lack of punch to upside moves. So, like Monday (based on no war with North Korea, yet), you get sort-covering squalls. But, with little or no investment-grade money behind the sort-squeeze, the market runs into trouble. That's especially so if Oil is neutral-to-defensive, as is the daily-basis case for the moment.

Geopolitically, you have no confirmation of yesterday's South Korean report of the US Navy planning to deploy two additional Carrier Battle Groups near the Korean Peninsula. However, should that be affirmed, it would signal the prospect of greater resolve to confront North Korea, and even to then deny airspace to North Korean so-called 'test' missile launches.

That's another rumor out there today, which suggests Washington is actively discussing shooting down any and all North Korean launches. If so, perhaps the threat by Pyongyang to 'test weekly' is alarming the Brass, since clearly that's how you'd hide a real attack, by having others that were tests; then all of a sudden here comes the missile with a disastrous payload. It's quietly in the background of the market's defensive nature at the moment.

Also, off-the-radar a bit, is Ukraine. We've heard rumblings of preparations by Kiev to try to increase security, or even reassert proper control over their Eastern provinces. Again it's Spring; plus America's so-called optimism with regard to relations with Russia, is not on a high point. Some might believe it is an excellent time for Kiev to try to consolidate their areas of governance. Also note that 'Eurovision' starts May 9, and this year's host is.. Kiev.

In-sum:

We're in a consolidation (within Monday's range) for the S&P, while other sectors are actually holding-up a tad better. Even with representation in Oils heavy for NASDAQ, it and the Russell were still notably firmer today.