Sometimes, gentle reader, we think things will be all right, especially when summer rolls in and fish are jumpin’ and the cotton is high. Why, just the other day we were tooling down the highway in our 18-year-old Saturn station wagon (she and her V-6 can now vote. Hurray!) and, miracle of miracles, our i-phone music library played beautifully through the cassette deck thingamajig from what had once been a problematic stereo.

Not so fast, you say; OK, we hear you. Yes, the “check engine” light was still on. But we had Petula Clark telling us that she knew a place where we could go where the lights are low, and Peter and Gordon were assuring us that nobody they knew loved us more than her. All with no bass rattle! What’s more, the potholes we had dodged for several months had been filled by conscientious government pothole fillers. As we always say when each day confounds us with good luck: so we’ve got that going for us.

Which means that one of our pillars for equity underperformance – a trade war (see What Rough Beast?) – has been masterfully parried by that stable genius Donald Trump. He may not know the American lyrics to “God Save the Queen,” or that red coats, not Canadians, who served under that anthem, burned the White House down in 1814, but he’s a shameless son of a gun and Wall Street doesn’t care as long as profits keep growing. The cotton is high indeed.

What we hadn’t counted on was the co-dependency of the United States of America and the People’s Republic of China. For all the blustering about trade deficits, the USA loves buying cheap Chinese stuff at Wal-Mart so that Beijing gets the do-re-mi to buy USA bonds. Duh!

But hold on! Everybody the USA fought with and against in WWII is ablaze with outrage after the G-7. Hey, everybody's human.  Who wants to be played for a chump?  This can't end nicely.

The S&P 500 is up 3.62% this year and up 13.83% year over year. We find it interesting, though, that the consumer staples sector -- the manufacturers and distributors of Eggo waffles, Marlboros, diet Coke and the like -- is down 12.5% year over year, while information technology is up 28% year over year. This tells us that investors believe that we wage slaves will never dig ourselves out, while Facebook, etc., will soldier on and raise rents wherever they invade.

The bull in the China shop is the Federal Open Market Committee. Once it starts choking credit as prices rise (try booking a flight from Dixie to NYC this summer!), the proverbial punch bowl will be snatched away before working stiffs like you and us get a raise.  A recession will follow and rates will fall, in our view.

We love the late sunshine; our tan is progressing nicely. But in two weeks the star that nourishes us will begin its lazy slide into the horizon and so will stock prices, in our view. The United States 10-year note is at 2.93%, close enough to our buy target of 3%. Sell stocks, buy bonds. At 143% of GDP, equities are way too rich, we think.

Forgive us, dear reader, but we must resort to the New Testament for our outlook:

“Therefore, whoever thinks he is standing secure should take care not to fall.  No trial has come to you but what is human. God is faithful and will not let you be tried beyond your strength; but with the trial, he will also provide a way out, so that you may be able to bear it.” (1 Corinthians, 10:12-3, New American Bible translation).

We can bear it if you can, gentle reader. We’re pouring another diet Coke, opening another pack of Marlboros and plan on toasting an Eggo waffle in the morning.