Market Briefing For Thursday, April 13

Falling dominoes have been evidenced starting with Oils, then Financial stocks, and of course autos and housing; most of which have been primarily on the defensive since early March; with notable (forecast too) rebounds in Oils, but not so much in others. We call this an ongoing distribution process.

The technical pattern of the market also conformed to this measured move and other factors, including believing VIX couldn't stay as low as the 11 area for long, while various legs of markets faltered, in outlined rotational ways.
 

I also noted diminished GDP growth forecasts, substantiating my view that the near-recession-like economic stagnation, analyzed here as dating from July of last year, persisted. The entirely bullish view here from November, as you know, held that buying cease after the initial opportunities, aside one or two special situations, hat stocks he held into the Spring, then lightened-up to the extent one might feel warranted, to prepare for corrective behavior.
 

During this predicted post-Election upside move, I emphasized how 'timing' of such matters as 'healthcare' and 'tax-reform' would play into not only the rallies, but the (now unfolding on-schedule since early March) correction in a market climate reluctant to give grounds, because the economic future does promise to be 'better' as and when Legislation becomes implemented.

Here the key was whether the tax moves will be retroactive to Jan. 1, 2017, or more likely if they can't get it done before August, then Jan. 1, 2018. That is acceptable but retards CapEx and capital repatriation moves by business until a later date; and that's also reflected in lower corporate loan demand. (I noted that tax-cuts for 2018 would impact returns in 2019 for tax year 2018; so individuals will have to tough it out for a while longer with that the case.) 

Now, we also have the added impediment to significant upside from the one area we've emphasized besides economic fundamentals and technicals that along with political delays, constituted the primary impediment to extending a wonderful solid advance we predicted in-event of a Trump 2016 victory.

That area is geopolitics. The long-game with Syria will have to involve sort of a coordinated strategy 'with' Russia; not an ultimatum as such to Moscow. The move towards diplomacy and a balanced rather than impulsive tone to governance, is increasingly evidenced; including Sec'y. Tillerson's meetings in Moscow that did escalate to a direct conference with President Putin.

In-line with my extensive comments last night about China's preparations on the Yalu River, and a belief that is NOT related to supporting North Korea at all; but to the contrary may likely be a 'grander strategy' carving-out both the military moves and ultimate geography of a post-conflict Korean Peninsula.

Bottom-line:

The market continues the process of a high-level distribution and has not yet reflected the really high geopolitical stakes involved, which at this point don't view Syria as a diversion, but rather a precursor to what's afoot with China regarding North Korea.

That's why I believe China was so calm in response to the missile attack on Syria as the Presidents dined, and why I suspected the 'vanishing' story via an op-ed in a Chinese military website revealing the heart of what's coming (potentially) may be key to both the new Chinese-American Alliance nobody even realizes may be taking shape (presuming we're right; and as we said a few days ago, part of why there is no huge trade war likely with China).