Market Briefing For Monday, June 24

Bulls will spar with Dragons at the closely-watched G20 Osaka meeting in the week ahead; while 'waiting in the wings' ready to pounce, may be a pack of Bears. On the back of a compliant Fed that pushed any rate cut just a month forward (very much as suspected); and now restive apprehension about what comes next in the Persian Gulf; the market remains ... stable.

Peace, harmony and inspiration.. may be what is celebrated on 'Yoga Day', but whether it's global or domestic politics, we're seeing anxiety instead. At least the stock market managed to be somewhat anesthetized during what of course was a now-completed Quarterly Expiration.  

Typically, markets come under some alternative movements after Quarterly Expiration(s); but in this case it's mostly on-hold, this time ahead of Osaka; and that matters a lot. The market isn't convinced a substantive 'deal' will be forthcoming from G20; and we actually haven't expected that either. Rather, an 'understanding' if not Agreement, to simply advance talks, will suffice. Of course it's hard to correlate that to the impact on already-extended markets, but anything but a 'bust' could at least see a bit of a relief extension. 

In sum: current situational awareness should relate to the Summer Solstice as well; since with the projected preceding upward move extended, we're looking for a rougher time, with more volatility, for the Summer's 2nd half.  

I note that particularly because it 'allows' for a bit higher S&P first, especially should sort of a 'deal' or direction towards a deal at G20, reveal reasonable progress with the U.S. and the Chinese, which is contrary to (mouthpiece) Global Times Editorial today, which often reflects Beijing's views; but in this case could be just 'posturing' ahead of the G20 gathering.  

  

Regardless of near-term consolidation, then perhaps even higher prices (to the chagrin of the growls Bears and perennial naysayers) by the S&P, we're unlikely to see other Indexes match that, and there will be concerns about a Fed that historically doesn't even contemplate 'cutting rates' with a market at basically new highs; suggesting a recession might ensue.  

They've ignored, of course, the nuances of contraction leading to recession; ongoing for over a year now, and that's why (especially if we get USMCA; a more important trade deal than one with China, passed; but do make a deal with China), the 'recession' may end before it's formally designated. A new concern will be if the U.S. 'takes-on' the EU and Germany after all that.  

As to the Iranian crisis; by no means is that over; and we think it's desirable to hammer-it-out a bit in Monday's United Nation's 'closed session' Security Council gathering. I do know a Delegate who will be in the Council Chamber but of course he's not a 'fly on the wall' for me; nor would I even inquire. In a perfect world (which this is not); Iran and the U.S. would candidly address a series of alternatives roads this conflict could take; and avoid the bellicosity that has dominated the verbiage from Tehran, more so than from the U.S.

Bottom-line: none of this changes our view that after we eek-out a bit more (even a relief rally later upon a deal with China, should it occur), higher high or not; later-Summer roller-coaster activity for a period of time that will vary, remains probable, as I've outlined.