This is the correction that never comes. It’s like the entire U.S. equity market has become one big China “hard landing” meme. Remember that one? We’ve been warned about the China crash now since 2010. Yet, on Monday, the only market that’s down is China’s A-Shares with the Deutsche X-Trackers CSI China 300 down around 1%. Everything is still coming up roses.
On Monday, JP Morgan’s global head of macro and quantitative derivatives, Marko Kolanovic, said in a note to clients that it’s best to stand down.
“Clients are now asking us if it is still our view that every dip needs to be bought,” Kolanovic writes. “We think that would not be prudent over the next two to three weeks given the recent geopolitical developments and related tail risks. These geopolitical risks are primarily related to an escalation of tensions with Russia and North Korea, and the upcoming French elections.”
Working backwards here for a moment, French nationalist Marine Le Pen is seen making it to a second round against Emmanuel Macron. A Le Pen win puts the euro’s future in jeopardy. A Macron win means status quo for the foreseeable future.
The U.S. has moved war ships close to North Korea, which has everyone assuming that if former member of George W. Bush’s “Axis of Evil” fires another test missile, a launching pad may be bombed from a U.S. Navy destroyer a few miles off its coast. How North Korea reacts to that is anybody’s guess. China also does not want war on its border, but is closer politically and economically with the U.S. than it is with the North Koreans. Russia has stayed out of the conflict but is preparing for the worst on its border as well.
In Syria, president Trump has signaled that the U.S. and Russia will work things out. While this is all very vague, it is better than a more belligerent tone of “my way or the highway”. Barring an explosion in Syria, North Korea and France are the likely hot spots that can turn this market on a dime.
Gold futures rose to nearly $1,300 an ounce this morning, despite the S&P 500 (SPY 515,71 +2,85 +0,56%) rising along with it.
Geopolitical concerns are pushing fear gauges higher. The Bank of America Merrill Lynch Global Financial Stress Index rose to 0.24 last week, meeting the peak reached in February and rebounding from a low at the end of March. JP Morgan: Ease Off The Dips
This is the correction that never comes. It’s like the entire U.S. equity market has become one big China “hard landing” meme. Remember that one? We’ve been warned about the China crash now since 2010. Yet, on Monday, the only market that’s down is China’s A-Shares with the Deutsche X-Trackers CSI China 300 down around 1%. Everything is still coming up roses.
On Monday, JP Morgan’s global head of macro and quantitative derivatives, Marko Kolanovic, said in a note to clients that it’s best to stand down.
“Clients are now asking us if it is still our view that every dip needs to be bought,” Kolanovic writes. “We think that would not be prudent over the next two to three weeks given the recent geopolitical developments and related tail risks. These geopolitical risks are primarily related to an escalation of tensions with Russia and North Korea, and the upcoming French elections.”
Working backwards here for a moment, French nationalist Marine Le Pen is seen making it to a second round against Emmanuel Macron. A Le Pen win puts the euro’s future in jeopardy. A Macron win means status quo for the foreseeable future.
The U.S. has moved war ships close to North Korea, which has everyone assuming that if former member of George W. Bush’s “Axis of Evil” fires another test missile, a launching pad may be bombed from a U.S. Navy destroyer a few miles off its coast. How North Korea reacts to that is anybody’s guess. China also does not want war on its border, but is closer politically and economically with the U.S. than it is with the North Koreans. Russia has stayed out of the conflict but is preparing for the worst on its border as well.
In Syria, president Trump has signaled that the U.S. and Russia will work things out. While this is all very vague, it is better than a more belligerent tone of “my way or the highway”. Barring an explosion in Syria, North Korea and France are the likely hot spots that can turn this market on a dime.
Gold futures rose to nearly $1,300 an ounce this morning, despite the S&P 500 (SPY 515,71 +2,85 +0,56%) rising along with it.
Geopolitical concerns are pushing fear gauges higher. The Bank of America Merrill Lynch Global Financial Stress Index rose to 0.24 last week, meeting the peak reached in February and rebounding from a low at the end of March.