2017/08/18 Commentary: ‘Troika’ Into Next Week

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Commentary: Friday, August 18, 2017

‘Troika’ Into Next Week

No, not the sustained collaboration Troika between the European Commission (EC), European Central Bank (ECB) and the International Monetary Fund (IMF) that is overseeing the Greek Debt Bailout. While we feel the Greek Debt Bailout situation is still festering in the background on the IMF actually only funding its commitment once the European creditor nations agree much more extensive Greek debt relief, that is not the ‘troika’ of the moment. We are rather referring to the tendency noted at many past junctures for any sustained pressure on US equities tending to require a confluence of three negative factors. Interesting in this case was seemingly more dovish than expected July 25-26 FOMC meeting minutes (our marked-up version.) That might have been a shining of the light of dovish benevolence, yet it brought concern to the equities. For much more on that see Thursday morning’s Commentary: FOMC Minutes Minuet post.

That was grounds to feel that for all of the Fed-speak on strong employment fomenting inflation there was some reason to believe the Fed was just ‘puffing’ again (like during its 2015-2016 ‘normalcy bias’ phase.) There was also the crumbling of business support for President Trump in the wake of his lame response to the fallout from the Charlottesville protest situation. This feeds the sense (previously explored at length) on the degree to which Trump’s diminished standing and distractions for the US Congress are a problem for the Trump reform and stimulus agenda; and by extension the US economy.   

And while the North Korean (NOKO) situation dropped from the headlines in the wake of Trump’s domestic problems, it is due to come back into focus on annual US-South Korea major military exercises from the beginning of next week. That is important, and anyone who has not done so already might want to review our WEEKEND: NOKO Crisis Redux post that also suggested a solution. And the first step of the US reverting to silence, ratcheting down rhetoric and only reacting to whatever North Korea actually does next has seemed to occur for now. Yet there is no guarantee this will remain subdued, and the equities might have been under some pressure from anticipation of that as well.

And so the negative ‘troika’ triumphed since Wednesday morning, with some fairly predictable market responses that we are going to pursue straight away….

Authorized Subscribers click ‘Read more…’ (below) to access balance of the discussion. Non-subscribers click the top menu Subscription Echelons & Fees tab to review options. As this is a ‘macro’ assessment, Market Observations remain the same as last weekend’s WEEKEND: NOKO Crisis Redux post that were updated (lower section) after Monday’s Close, and there is no Extended Trend Assessment in this post.

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