Increased discipline might reasonably describe both equity markets and geopolitics today, even bond markets. Lots of discussion about rates peaking and bond buying, which we touched on last week, but got overshadowed for sure by global events. 

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You also have what Goldman Sachs calls a 'buyback window' in November. I am thinking that as stocks trip stops (such as S&P breaking below the 200 Day Moving Average and today's break of S&P 4200), it invites accumulation by money managers, gradually, with an eye on 2024 not particularly this year.

I think that's a valid observation regardless of unpredictable headwinds from a financial or geopolitical perspective. Yes some have a view of a 'hard landing' being 'next' year, but I don't. Mine is that this year was and is the 'softish' sort of economic landing, which sets-up renewed growth with modest 2024 vigor.

I could be totally wrong about that should the current global picture deteriorate significantly. But it's also feasible that the stunning toll of recent weeks sobers a lot of thinking, perhaps even tames rather than exacerbates China's designs on Taiwan (for the moment, contrary to those expecting an incursion sooner), at the same time Russia, certainly welcoming the world's attention on the war between Israel and Hamas (so far, and perhaps expanding) .. Putin just might start to envision what Moscow's situation would be.. 'if' .. he prevailed. There is no way Russia and Ukraine (once nearly like brothers) would get along well no matter what. In any event, we're sort of seeing brief efforts to clam matters.

Market 'X'-ray: 

Anticipated a bit of S&P washout and stabilization, but nothing impressive. And that's what we got. Not much. And we have 'buyback window' time (as Goldman calls it) which generally is November, we think bits of that in late October is feasible (in purges not surges), but without instant gratification.

And of course you had a big move today with rates spiking and dropping, as I recall we (and Bill Ackman) were talking similarly about peak rates last week. I can't say this is just about the broader economy or the war's aspects in this narrative, or Japan's involvement (or safe haven aspects), but it dovetails. As to whether the rate move is entirely over or not is likely less pertinent than the prospects of this taming. Now yes the GDP may be higher, but some of that's inflation-based, so that should mitigate upward pressure that might result.

As to the war, remember 'speak softly and carry a big stick'? Well put aside all the viewpoints (ranging from former Pres. Obama's to Lindsay Graham's) and consider so far the U.S. has been speaking loudly and not waving many sticks at the enemy. Why? I suspect discussion of USS Carney covers the essence of this. Not ready: getting 'sticks into place' (weapons and air defense crews), and then as former President Bush would say: 'they'll soon hear from us'.

So, 'positioning portfolios' is what we're discussing, without expecting financial or geopolitical resolution immediately, presuming the optimal price levels (for stocks or bonds) won't be when the future vision is crystal clear. It's definitely 'muddy' now, and that means trying to cull-out bargains, or just simply wait.

A lot is coming this week, not Fed-speak, but earnings. And of course.. war. It is a slippery slope but some of the pressure is off and some of that relates to a market that I sometimes call 'pre-crashed' outside of the big mega-caps. Of course you do have issues such as concern of Apple iPhone 15 demand just a bit slower now (should be as the 14 and 15 are virtually identical as I attest after two weeks with the newest.. fine but can't tell anything varying at all), as Apple is the 'primi-donna' of stocks holding up the S&P. Then there's Beijing 'investigating' (do they do that before people disappear?) Apple for tax issues.

Also Intel got hit today based on Nvidia (NVDA) and our AMD (AMD) planning ARM-based cpu (PC) chips (in competition with Intel). Well Apple (AAPL) put their (licensed and then farmed-out design) for ARMS-based chips in MACS, and I'm unsure this makes that much difference to Apple stock in terms of non-MAC machines increasingly gravitating to ARMS chips. In fact they might now, depending on Intel's next-generation processor which we've not had a chance to review yet.

I will say that I personally use an Intel-powered iMac and ARMS-powered MacBookPro, and I cannot say that in routine use the newer MacBook Pro is (or seems) any faster or more efficient than the older Intel-based iMac. But I am not doing the kind of heavy processor-dependent computer or graphics which could benefit from super-high performance. To me, the flash drive plus sizeable DRAM and fiber internet connection is what makes a daily difference.

Also Chevron (CVX), as our long-followed Oil stock (and Index component issue) is down a bit on the Hess acquisition news, which while not thrilled about it, but am sure Hess's Son most likely really is (about 5 billion worth). Much will be dependent on structural economic growth, descending interest rates, and of course global demand for Oil, which may hinge not just on China, but war or of less war. (Right now, 2 more hostages were released by the terrorists, but Hamas is asking for 'fuel' to release 50 more, and that's a bit of a non-starter.)

Military posturing . . . has changed quite a bit in the past two days, so much so that media continues to mix-up what is happening, typically a confusion of 2 vs. 3 carrier groups and getting the story way off as may related to 'why' the USS Eisenhower is being re-tasked to the Gulf of Aden / Red Sea / Indian Ocean, all near but not in the Persian Gulf itself.

It could be the USS Carney they sent through Suez and did a magnificent job intercepting the approximate 4 long-range cruise missiles and 15 (!!) drones, it could also be that Carney was sent to the Red Sea as an 'air defense' screen for USS Bataan, which isn't confirmed (but I believe) to be in the Red Sea as well, probably near Eilat, as I noted the other day. With over 3000 Americans aboard (Marines and sailors) the Bataan was 'on its own' until Carney arrived hours before the battle. And that battle continued for 9 long hours!

My hunch:

That was a huge Pentagon wake-up call, hence reinforcements. If I am right, our 5th Fleet (HQ's Bahrain) and even small base in Djibouti likely felt under-protected both versus Iran (in-event of hostilities) or even Yemen if the Navy didn't realize Iran had put such powerful missiles in their hands (for that matter probably operated by Iranians). Anyway 'force projection' needed, whether the USS Carney was dangerously as risk during it's voyage, or not. (It had no air cover available, and Djibouti is 'not' a Naval Air Station either.)

I think the successful intercept Carney did just avert a major instant war. At the same time since 'our' ship(s) was targeted, the terrorists wanted to hit us. I think the media's only mentioning the 'bare minimum' thus avoiding reality: we (U.S. Navy) were targeted. Thankfully, our Standard 2 surface-to-air missiles worked well, but media is ignoring the implications: they tried to hit us directly.

Bottom-line:

The bond behavior helped rattle the market, but so did the early penetration of S&P 4200, got some comeback not much, about as I expected on the morning 'tweets' and what we discussed previously.

The dynamics of the international situation are only sort of fluid. I think we are preparing to intervene or respond decidedly as more elements of our forces are in-place. Last week I suggested it would take more time before any mass overrun of Gaza and that's the case. I'd say about 2 more days and you would have USS Eisenhower to be 'on station' in the Gulf of Aden / Indian Ocean ('near' Persian Gulf) plus THAAD or other defensive missile systems deployed were defense is lacking (almost all small detachment areas of U.S. military).

So, a reason I'm thinking this is because the Pentagon soft-pedaled the attack on USS Carney (and/or USS Bataan), probably not because of Washington's lack of backbone, but rather because we weren't ready for the next step which is retaliation or at least ultimatums. That could occur later this week and have a reaction in the market, which wouldn't necessarily be negative strategically.

P.S. I also worry that the number of rockets Hezbollah has could overwhelm defenses in Israel or even our small Army units in Syria. Hence resupply and get 'ordnance' to the necessary forces is probably a priority of the moment.

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