Juche? Self Reliance?

Let me re-iterate again.....

New highs beget new highs ...…..and that was true again yesterday as all 3 indexes tossed back and forth over the unchanged line all day only to end the day at yet another record close – The Dow + 39 pts, the Nasdaq up 6 pts and the S&P up 2 ending the day at 2498....now no longer teasing - but rather 'kissing' the psychological 2500 milestone.....The action suggesting that investors continue to shake off any geo-political concerns at all as they focus on the macro data and the coming tax reform proposal that is supposed to be revealed by month end......The momo (momentum) trade is alive and well........ and with an accommodating array of global central banks - it is the gift that keeps on giving.....

Yesterday's eco data was in line (as expected) so no big deal there......and today's reports will most likely be the same.  At 8:30 we get the CPI ( Consumer Price Index)  - for review - the CPI report measures the weighted average of prices of a basket of consumer goods and services to shed light on the cost of living......Think transportation, food, healthcare etc.... The CPI is the key measure that the FED uses to identify inflation or deflation.....Today's report is expected to show an annual inflation rate of 1.8% and CPI EX Food and Energy is expected to show a rate of 1.6%......both below the FED's target rate of 2%....... and this makes it increasingly unlikely that the FED will raise rates in December.....Thus putting that floor under the mkt.......

Now that being said.....it appears that Chubby (Kim Jung On) has once again crawled out from under his rock and is threatening not only the US but is now tossing Japan into the mix saying that

"The four islands of the archipelago should be sunken into the sea by the nuclear bomb of Juche.  Japan is no longer needed to exist near us"  Attached to this was his idea that the US should also be reduced to ashes and darkness......

I know what you are asking.....WTF is Juche????  Juche Ideology was authored by Chubby's grandfather..... the first NK President Kim il Sung (1948 - 1972) - it is the policy of 'self-reliance'......and it cuts off NK economically and diplomatically from the rest of the world......(self-reliance??? Sounds like masturbation to me - but what do I know?) 

And this is causing tensions to rise again......He is also calling for the complete elimination of the UN Security Council which HE called "a tool of evil made up of money bribed countries that move at the order of the US"....

And so global investors will have to weigh in on this.....will they ignore the renewed threat or will they move from Risk On to Risk Off and move money out of global equities and into the safe haven asset play again?   At the moment - it does not appear that this rhetoric is causing a move in that direction......but a launch of a missile could change that psyche in a flash....just sayin......

Global intelligence sources suggest that after the UN passed the latest sanctions against NK -  Chubby's 'missile launch signals' have spiked higher......and the risk of another missile launch remains elevated  over the next 14 days......

Overnight in Asia - mkts backed off a bit - but more because of weaker Chinese macro data vs. anything that Chubby said.......August Industrial Production did rise 6% but that was below the 6.6% estimate.....and Fixed Asset Investments rose 7.8% vs. the 8.2% forecast.....Retail sales also missed the mark - rising 10.1% vs the est of 10.5%.   Japan - 0.29%, Hong Kong - 0.42%, China - 0.33% and ASX - 0.10%.

European mkts are waffling ahead of the BoE (Bank of England's) policy announcement due out at 7 am this morning.....the Expectation is for them to do nothing - leaving rates unchanged while that discuss how they will continue to navigate higher inflation data while divorcing themselves from the Eurozone.  FTSE +0.005%, CAC 40 +0.01%, DAX -0.2%, EUROSTOXX -0.14%, SPAIN -0.7% and ITALY +0.19%. 

US futures are down 1 pt...as we await the BoE's statement as well as today's eco data...CPI,  Initial Jobless Claims of 300k and Cont Claims of 1.96 mil.  Again - I do not expect any of these measures to change the mood at all....The chatter will be about the weaker Chinese data and the BoE decision and what that possibly means for the FED.  Either way - it will be a conversation and not a mkt mover at all.....More chatter about Stevie (Munchkin's) Tax Reform is also on the agenda as the Trump administration tries to build support.......Chubby could cause some angst, but my sense is that unless he launches a missile - the mkts will take it all in stride...... Look for resistance at 2500 and support at 2475.....

Oil is trading higher  - WTI +0.45 cts at $49.76 after yesterday's spike higher on the API (American Petroleum Institute's) report  and the upgrade by the IEA.   Yesterday I said that

"Either way - a pop back to $49.50 would not be a surprise".  Bingo!!!    Gold is flat - which suggests that a move into the safe havens is not happening just yet.....
 

Take Good Care

KP

Grilled Rib Eye w/ Pappardelle & San Marzano Tomato Sauce
 

Now yesterday's menu elicited a number of responses....all good but one in particular struck me - so I am giving it back to you as an alternative to my presentation.

My dear friend Tony (would you expect something else?)  and an avid MT reader read the recipe and then came back with this:

"Sauté Italian long hots in the garlic then add the San Marzano.  Pour the sauce over Fresh Pappardelle, peppers on the side with the steak, hold the salad. Now you’re talking!"
 
To this I would only add - make sure you have enough fresh grated Parmegiana cheese.
 

  
Buon Appetito.

The market commentary is the opinion of the author and is based on decades of industry and market experience; however no guarantee is made or implied with respect to these opinions. This commentary is not nor is it intended to be relied upon as authoritative or taken in substitution for the exercise of judgment. The comments noted herein should not be construed as an offer to sell or the solicitation of an offer to buy or sell any financial product, or an official statement or endorsement of O’Neil Securities, Incorporated or its affiliates.