The 'battle-lines are quieter' for the response from G20; while valuations are really bifurcated again; not entirely unlike around this time last year. The meandering of the S&P near all-time highs; while the broad market really is nowhere near an equivalent level, has good and bad connotations to it.  

The 'Back on Track' with China negotiations, the suspected most-likely U.S. / China finale to the Osaka G20; leaves the market basically grappling for a clearer direction, which it 'sort-of' has given an obvious desire by the parties to make progress on key issues. Allowing the continued sale of components (and most importantly software not just microprocessors) to Huawei was a pointedly generous show of good-will by the Trump team to President Xi.  

Today (Saturday) I listened to the entire Trump Press Conference (he's tired by my take, and that's understandable), and watched it on C-Span, so as to not be swayed by media interpretations or out-of-context soundbites. 

We now await possible meeting with North Korea's dictator Kim; basically it seems we're seeing a continued effort by this President to reduce tensions, resolve long-perplexing issues, and avoid war while being prepared for real fights, if it becomes essential. Perhaps morphing into a 'Teddy Roosevelt' or similar sort, it becomes 'speak softly' (or in his case alternating with tougher talk) and wield a big stick. Certainly a successful 'super power' long-term is not going to maintain endless wars, but try to withdraw from such demands; whether righteous or not, except when push-comes-to-shove.  

It seems Trump is trying to convey that, even though not all around him are a similar worldview; and I suspect he's 'pressing the flesh' of world leaders, perhaps in ways suggesting they need to work with him to change evolving relationships in a peaceful and even competitive (but not combative) way if possible (particularly China); before he will no longer be President; with real prospects of actually more-hostile geopolitical climates might be revived. (I should note this also relates to 'actual climate', which it already is perceived as a bit late to get things achieved... better late than never, but the focus on this area remains one of economics more than climate efforts.) 

So Monday we return to the financial media enamored with uncertainties as related to either 'trade issues', politics, monetary policy, or struggling IPO's (which reflect some discernment amidst the half-baked or too late or too-early IPO's that came to market). There's a bigger perspective to all this; a reason I've called for rotating corrections; and not catastrophe during this period of time (extending for awhile going forward) since calling the forecast Winter rally to 'sputter-out' during the April-May time-frame; then bounce in June, which is definitely did, aside expected range-bound pre-Fed and more recently pre-G20 action. Nothing today changes overall churning patterns. 

Aside the news from Osaka (primarily addressed by the President); with the 2nd video highlighting action leading-up to the main event Friday afternoon); this varied valuation market reflected several overriding macro factors. One was concentrating the 'weakening manufacturing and business confidence'; a global drop in PMI (and on Friday the Chicago PMI dropped further); as in both cases these reinforce 'nuances of recession' we've spotted well over a year ago at this point.  

Equities will vary their performance in such a bifurcated market; with global bifurcation evident as well (it's almost embarrassingly myopic to see media in the U.S. seems to act 'as if' trade matters with China only impact us; while it is welcomed that this Administration 'finally' took the initiative to address it, which has the effect of representing the world (at least Europe and most of Asia) in the trade talks, because all are victims (or beneficiaries depending on how one wishes to view it) of .. Chinese mercantilism.  

 Recognizing the varying outcomes; or how many money managers missed the cycle-low entry point last December; a lot of chasing occurred, primarily in two areas. One was pressing the already expensive FANG types higher.  

That's a dangerous move even though they can advance more. depending on the macro circumstances that unfold. Although most have overhanging issues in regards to antitrust, privacy, or lack of innovation notable in most consumer electronics; that's just a temporary phenomenon that evaporates starting this Fall as 5G beings what will be a long rollout as it proliferates in most areas, especially AI and AR. (That's assisted by deferring any denial of 'parts' and software to Huawei incidentally and keeps China buying parts from the U.S., continuing to benefit Intel, and to a greater extent AMD too; while of course Google benefits most from the 'relief' accorded to Huawei.)  

The other concentration has been in defensive cyclicals; as managers trying to sidestep a bit of the turmoil that could result in late Summer activity, while being 'somehow' in the market versus their heavily bearish bias many had in the vicinity of December's 'V bottom'. What's missing? The majority of small and mid-size stocks, which had their Winter 'seasonal' rebounds; little more, and then moved into renewed corrections (or boredom) from February.  

That may not sound exciting; but that 'bifurcation' is part of why 'corrections' rather than 'crashes', were (and are) the prospect for this year's market. The history is sprinkled with markets that crashed from oversold or overbought; but mostly (barring a horrible exogenous event); not from such a mixed bag of patterns and conditions. Another aspect of course is monetary policy; the results of which not only indirectly helped the Senior Averages; but assisted something we are not impressed by: companies engaging in buybacks to lift their shares; rather than actual consistent growth in operating revenues.    

In-sum: regardless of knee-jerk post-G20 responses (which will be limited as the outcome was sort of a 'truce' but not a deal, and that's what I thought most likely anyway. So we anticipate rocky periods for the Senior Averages (as previously noted), generally evidenced in the time from early-mid July forward; again depending on trade progress as well as how agreements will be implemented as the return to serious negotiations with China evolves.  

A threat of Persian Gulf 'war' also overhangs this market, and underpins Oil globally; even as WTI itself is reasonably stable (our energy independence a factor; but responds to global pricing to a degree in-sympathy; and helped by seasonal demands which are rising, causing draw-downs in inventory). A very important OPEC (some say OPEC+ if Russian chimes-in with them) is taking place this coming week; it's been overshadowed by the G20 focus.

Looking at the year, our thinking has been along the evolving lines; turn up from the V-bottom; top-out in the Spring; rotate in a range for the S&P while small-cap and mid-caps correct; and perhaps reverse that somewhat, later in the year (small stocks find lows and even advance amid erratic action at best in big-caps, especially those intertwined with antitrust concerns).