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Trump's Latest Shocker: When the War Ends |
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Dear reader, |
The stock market has lapsed into "correction" of late — defined officially as a 10% retreat from its most recent peaks. |
I wedge the word correction between the tongs of quotation marks for reason. |
A correction is the undoing of an error, the righting of a wrong. |
Why does the word apply only to stock market retreats? Why are markets never said to correct upwards? |
Is not a 10% advance a correction of sorts against a previous undervaluation? |
Yet the term pertains exclusively to market retreats. Again, I ask why. |
I hazard — and here I speculate — that the term is a concession to the tendency of markets to race ahead of justifying facts. |
That is, the term is a concession to the tendency of the animal spirits to excessive enthusiasm. |
A correction is merely a temporary taming and caging of the animal spirits. |
Good Times Are Just About Back |
When can you expect the present correction to uncorrect? When will it conclude? |
Very soon, the experts assure us. For example, Barron's informs us that: |
That moment (of capitulation)may be getting close. For one, Trump clearly wants to leave an opening for a deal. On Thursday, he said he was extending Iran's deadline to open the Strait of Hormuz to April 6, from the March 27 deadline he had offered Monday. |
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He has also said on multiple occasions that he prefers that the war end in a matter of weeks. "The Trump Put has been struck," writes Chris Harvey, head of equity and portfolio strategy at CIBC Capital Markets. "Let's just say there is plenty of light"... |
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Mike Wilson, Morgan Stanley's chief U.S. equity strategist, notes that… "We remain convicted that this is a correction in a bull market that started last April… Our work suggests the correction is well advanced not only in time but price." |
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Just so. And I concede the possibility that this correction is well advanced both in time and price. |
It may soon terminate altogether. The stock market may soon relocate its courage… and embark upon a lovely spree. |
Yet as Freedom Financial News contributor Jim Rickards argued recently: |
Wall Street sells narratives to get you to buy stocks. "War will be over soon, oil comes down, Trump's got a plan." None of that is true. This war's going to go on much longer. |
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Trump's Jekyll and Hyde Routine |
Events nonetheless remain… fluid. One day to the next, a fellow never knows which way the tide will swing. |
For example: |
One day President Trump threatens Iran with conflagration. The next day he is prepared to let fly the doves of peace. |
Just yesterday he claimed the United States may quit the conflict within weeks: |
Within two weeks, maybe two weeks, maybe three. We'll leave because there's no reason for us to do this… I had one goal. They will have no nuclear weapon, and that goal has been attained. They will not have nuclear weapons. |
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And hope springs eternal on Wall Street — hope which the president is eager to instill. |
Wall Street is forever in search of cloud linings silver in appearance, for the glimmer of sunlight penetrating the gloom. |
Thus Bloomberg reports that: |
Wall Street staged a dramatic comeback at the end of March, with stocks climbing as oil fell on hopes that the war that has jolted global markets and disrupted energy supplies may be nearing a conclusion. |
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Equities saw their biggest rally since May on speculation that both the US and Iran might be looking for a way out of the conflict. The S&P 500 gained 2.9% and the Nasdaq Composite added 3.8%... The dollar dropped and gold rose. |
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The Trouble With Timeframes |
Will the president get leashes upon the war dogs within two to three weeks? |
I do not know. As Bloomberg also reports: |
It remains unclear how firm Trump's timeline is. He often sets two-week deadlines and regularly blows past them. The US has also moved additional troops into the region, preserving the option of further escalation. |
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And so a question rises into the air: |
Is the president going to send ashore the Marines… only to recall them to their ships days or weeks later… even if their objectives remain unattained? |
It would appear unlikely. Yet as always, or very nearly always, I do not know. |
Meantime, another question rises into the air: |
Why would Iran budge one inch in negotiations if it knows the United States will walk away in two to three weeks regardless? |
Better to Jaw-Jaw Than to War-War |
For their part, Iranian authorities — those who remain among the quick, at least — publicly dismiss peace discussions. |
Iran's Foreign Minister Araghchi, for example, claims that: |
We do not have any faith that negotiations with the US will yield any results. The trust level is at zero. |
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What is more, the Iranian government has dismissed United States peace proposals as "excessive and unreasonable." |
Yet as Sir Churchill once noted, "to jaw-jaw is always better than to war-war." |
For over one month the United States and Iran have war-warred. |
Perhaps — just perhaps — they can jaw-jaw their way to peace. |
And if not? |
Well friends, should the president cling to his suggested two-to-three week schedule… he may simply pronounce an accomplished mission… correctly or incorrectly… |
And walk-walk. |
Brian Maher |
for Freedom Financial News |
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