The Bear Is On The Prowl

The stock market bear is back on the prowl. While certainly still not a meaningful threat to stock investors at the present time, the bear is increasingly lurking about in the shadows. And the longer the rot continues to linger in many stock market segments, the more emboldened the bear is likely to be to make a bigger charge at the broader market.

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Waiting For Stock Market Godot

Stock investors are like Vladimir and Estragon waiting under the tree for Godot. But, instead of two days, stock investors have been waiting for nearly eight years now. Day after day, year after year, they keep waiting and hearing from little boy analysts about how the “great rotation” out of bonds and into stocks may not happen today but surely will happen tomorrow. Yet, outside of the Pozzo and Lucky like distractions, such as the daily rise of S&P 500 Index beyond any reasonable explanation on many trading days, the “great rotation” of money flowing out of bonds and into stocks never actually takes place. Are stock investors today merely players in the capital markets theater of the absurd?

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The Greatest Geopolitical Risk For Today’s Markets

Much has been made about the geopolitical risk associated with the U.S. standoff with North Korea. Included in these concerns is the potential that the unfolding situation could escalate into a nuclear conflict. Needless to say, the ongoing situation in Asia warrants close monitoring. But the markets are facing a far greater geopolitical risk that has been unfolding for some time and threatens to escalate dramatically as soon as the end of the week.

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Bullish Bond Breakout

The bond market is rising from the ashes once again. After the thirty six year bond bull market was flippantly left for dead late last year by many highly respected market analysts, it spent much of the first quarter of 2017 finding its footing. And the month of April has brought with it a bond market that is increasingly finding new life. This has included a bullish breakout that has the potential to meaningfully pick up speed in the weeks ahead.

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War Hawks

The United States launched a cruise missile strike on a Syrian air base late Thursday. The attack was in response to the chemical attack that took place earlier this week that left 85 dead and more than 500 injured. And the potential for regime change in Syria is also being mentioned along with the strike. Stock market futures immediately dropped with the news of the attack and remained lower heading into the overnight. This raises the natural question: will the start of a potential conflict with Syria that has the support of Russia be the catalyst for a sustained stock market correction?

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