Market Briefing for Friday, January 13

Superstition shouldn't cloud clarity about Friday the 13th, as this market is behaving in a perfectly orderly manner. With another holiday weekend sneaking up (MLK Day is Monday, with markets and banks closed), it wouldn't be surprising to see some squaring and semi-neutrality just now.

Now, appropriate for those who want to worry more, you have a few firms out there suggesting extreme risks of this melt-up (I find this to have been orderly and actually not a 'melt-up') preceding a melt-down. I do anticipate a correction; perhaps even more economic slowing during the process coming to revive the United States. But it should be tempered compared to what the alternative might have been.

With that said, the rolling adjustments or mini-corrections at this level really are technically 'healthy' even though fundamentally of course they reflect a lot of hope for the future, with limited realization of that promise so far, and a dose of reflection when they look at Budget-busters and Debt Service later.

However, the question will be the speed at which policy changes are newly proposed, then enacted, and of course the often-plodding nature of bids and implementation of projects and so on. That's why I've said even before this election, that it would consume a majority of the Administration's first year; at the same time that the ensuing time-frame should see benefits beyond of course the hand-wringing about the costs (and cynicism by some) to start.

You have a very pro-business 'new Sheriff' coming to town and he's already taking few prisoners when controversy erupts; and making lots of progress. Clearly the most pro-growth / pro-active transition ever seen. If nothing else, it matters less which executives President-elect Trump 'seriously' intertwines with in terms of influencing, as it really matters more that 'all' executives see the pattern. Devil in the details for sure, especially with a VAT tax variation.

Bottom-line: The market remains fairly stable with minimal consolidations, unworthy of the term 'correction'. That's likely coming, though we think later in the month or early February, unless civil disobedience is so prevalent at the Inauguration that it disrupts society and even the markets. Given how we just came through such divisiveness, it's incredulous how many desire to persist in efforts to destabilize the political system, if not the Nation. This is a potential problem, the dimensions of which are hard to assess as of yet.
 

I'm also thinking that the 'rejectionists' as I call them are crying 'wolf' before they have an issue to cry wolf about; so their protests may seem redundant should there actually be something worth protesting down the road. 

So while the market can move higher near-term, it remains fluid and terribly news-sensitive. So far the shaking is more like temblor fore-shocks with an awareness that the main event could have broader implications. We'd keep in mind that this entire rally of the last couple months is based on optimism related to the 'Trump effect'; hence if anything changes, be careful.