- Why do stocks only “correct” downwards?…
- Trump says U.S. may end conflict within two or three weeks…
- The market is rigged to reward insiders. But the rigged game ends today! You can actually get out in front of what’s set to be the biggest IPO in history… before it goes public.
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.
- 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”…
- 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.”
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.
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.
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.
- 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.
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.
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.
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
