Market indecision in the wake of the anticipated rebound of the past week, is pretty evident. At this point the market has not succumbed to what some of us think may be a foreboding situation in the Middle East (possibly Ukraine as well), and I can’t elaborate a lot.FreepikI can share my brief thoughts via a note in the last hour. Today I’d exchanged reflections on the war’s prospects with a well-known retired Colonel, and with an active duty Navy friend. Clearly there are alternatives and no conviction as to how the war concludes except this: Israel is ‘not’ going to allow Hamas any wiggle room to get out of their situation, given they already stated ‘if’ they’re unsuccessful now, they will attack again and again. Hence eliminate them.At the same time it’s pretty clear that many Israeli’s and many Americans are not at all happy with Netanyahu running the show, but there’s little alternative, even though everyone seems to believe he’s political toast after this war. That has been the similar case for other national leaders in such situations where everyone pulls-together during the fight, then political leadership changes. As you know, it took Netanyahu bringing-in the extreme far-right to his cabinet, the way his Government got formed, but it also (the ‘settler issue’) flamed tension.And there’s no doubt Hamas views ‘their own people’ as ammunition, figuring they get sympathy of sort the more of their own are killed by virtue of terrorist personnel being embedded in their midst. There is already discussion among leaders about how in the world to not just ‘govern’, but pay for rebuilding Gaza on the presumption it won’t be completely flattened to open-space agriculture.(The above doesn’t mention it, but in-case you missed it, Russia has signed a deal with Eastern Libya rebels, to establish a naval base. Southern Europe is of course concerned, but it may also be to offset the U.S. right on-top of their Syrian naval base at Tartus and able to closely cover air activity from Latakia.)Among things I’ve learned, besides the US military on ‘full alert’ in the Persian Gulf and more drones launched against U.S. targets by Yemen/Houti, is that the Prime Minister of Iraq today went to meet with his Iranian counterpart, just a day after meeting with Sec’y. Blinken. So you could interpret that either way. And on Saturday, the Taliban sent a delegation to Tehran, so there’s that . . . a suspicion on my part that Hamas attack was just a triggering mechanism that intended to evoke not just a justified heavy Israeli response, but Muslim rage, as what Iran likely wants is global conflict with Western Civilization itself. May be more than rhetoric that you hear on this topic primarily from Israelis so far.Also, I’m told the ‘average age of a fighting man in Ukraine is about 43′, and that’s not good, telling you they are running out of personnel. I suspect Russia has a similar situation, but they have more population depth to draw from. It’s unconscionable Putin hasn’t stopped this, and maybe it will devolve to a ‘who gets what pieces’ sooner rather than later. Zalensky views are is logical, but is it doable? I have no idea, but clearly the focus has shifted away from Ukraine.Not enough people seem to grasp the importance of ‘both’ Ukraine and Israel to continued ‘rule-based’ politics and economics (democracies) internationally.(To a degree some of the problems can relate to young minds poisoned on at least some college campuses, as everyone is talking about, as appears true.) ’Market X-ray’Doubts if it’s wise to chase the upside even if able to extend a bit more. It’s not so much ‘run with or run from’ the rally, as we had it, short covering was part, seasonal lows too, but there’s just too much challenging it to suggest anything more than we did: nibble two weeks ago and stand aside on surges, only buying on purges.From a technical perspective, the market held where it needed to on a break of S&P 4200, then you got interest rate stabilization, both of which we looked for. And you had the seasonal ‘trough’ or pattern-nadir at end-October.There’s no particular catalyst to extend the upside, other than seasonal norms that are common, but we need more for anything stronger. That makes Powell remarks later this week needed to ‘calm’ anxiety on the financial side, or not, so we’ll see. And if there were something solid from Semiconductors but not a further run-up in Oil, would also help. Neither is assured this week. Bottom-line: A quiet moment in turbulent times for this market. Credit issues and default risks persist, but we could well be past the lowest liquidity aspect, although even bankers have divergent opinions on where this stand beyond a Fed that is likely ‘done’ as far as rate moves.We’d be pleased if it rallied more now, but skeptical short-term. War ramp risk.More By This Author:Market Briefing For Monday, Nov. 6
Market Briefing For Thursday, Nov. 2
Market Briefing For Monday, Oct. 30th