E Market Briefing For Monday, Nov. 13

Stock market veterans might feel like they’re navigating a minefield, with conflicting influences on the political, economic and especially geopolitical stage at the moment as oil has supported the move higher; but generally because of rising tensions surrounding Saudi Arabia (and Lebanon); not at all a result of production levels or any sort of supply/demand equation. 
 

Meanwhile next week will see the President return; and a market usually on the upswing while ‘retail’ will be jittery ahead of numbers; but some results are ‘not as bad as they could have been’. And we’re two weeks from ‘Black Friday‘. The retail story matters mostly with respect to what victims appear next for Amazon to raid; and that’s a bigger issue than Time Warner/AT&T.

The market primarily worries about tax-reform, and we do not accept ideas of the market being able to simply advance dramatically if it passes or hold where it is should it totally fail. A lot of that is inherent on everything Trump campaigned on, and tax reform and capital repatriation is at the heart of it. That’s part of why the market shrugged off so much this past year. 

Others would say it’s only passive investing and ETF concentration; but that reflects the money coming-into funds (or ETF’s) based on new optimism as Trump won; with a presumption that the market was otherwise tiring before the election. To that end we think there’s serious risk if a bill doesn’t pass. If it does you definitely will see the consensus look for stocks to push higher at least temporarily, as investors nurse their holdings into the new ‘tax’ year.  

In sum, unless we see inflation work a bit higher (aside Oil); you have an argument for the Fed to hold-the-line regardless of the Yield Curve. I tend to not embrace that perspective, as yields have been pushing higher (not such that they inhibit business but enough to be noticed with respect to servicing debt; hence a Fed sort of between a rock-and-a-hard place on this). 
 

The new week will perhaps be relieved if the President is home, and IF we do not have more threats or open hostilities expanding in the Middle East. If that’s the case (stability of sorts as persists now) we can envision the S&P trying to challenge the 2600 area (or nearly that) again. Nevertheless it still seems to be limited upside potential with lots of downside risk.