Week in Review:
Resilient. Unassailable. Unshakable. Choose the adjective you prefer to describe what you prefer — the markets or the administration because they are inextricably linked as witnessed in this week's action. The tweet and the Russian controversy, abetted by exhaustion from an unstinting market that has run 103 days without a 1 percent decline, catalyzed a slight move into the red as trading began on Monday. It extended through Wednesday — who would have thought three days in a row was even possible? However, after this momentary respite from giddiness, David Tepper arrived and put a floor under the indices, forestalling a more significant sell-off as the pre-market indicators rallied from deep red to a light shade of green, opening +1 handle when trading began. In essence, Tepper's correlation to the markets, owing to a long-term pattern of inordinate accuracy, won out over the market's much more recent predictive technical indicator with a significantly short period of correlation, the Trump tweet. By Thursday, all was good with the world again.
I'm actually proud of this market, how it has matured. No longer is a decline in crude prices taken prima facie as a signal of economic weakness, energy having its worst week in quite some time; no longer is a hawkish Fed and rising rates a time to panic. Nope, investors can see clear through to the strengthening economy, comprehending that we are still at historically low real rates and awash in liquidity, both being important ingredients for a continued rally, the bull case further supported by a healthy dose of caution from the majority (by my count) of market commentators.