Highlights of this Update:
- Save the date: Thursday, September 28th: F.I.G. Annual Event-Jones Assembly in OKC!
- Call for your review now if you have not yet done so this quarter.
- S. stock indices drop last week on North Korea tensions.
- Odds of actual conflict remain low.
- Stock resume gains so far this week.
READ FURTHER FOR ADDITIONAL DETAILS……………………..
SAVE THE DATE:
Our annual client event for 2017 has been confirmed for Thursday, September 28th. We have secured the Jones Assembly for the evening in downtown Oklahoma City. This is Oklahoma City’s newest premier restaurant and event center, and are very pleased to be able to provide this as our 2017 venue. Attendance will be limited, so be sure to save the date and watch for additional details to follow.
Third Quarter is now Half Over:
Be sure to call today to schedule your personal review if you have not yet done so. It’s a great time to review not only your investment portfolio, but your overall personal financial planning as well. This quarter we also want to assist you in reviewing your estate plan to be sure it’s in line with your current goals and objectives. Call us now to set up a personal meeting, either in person or via our Go-To-Meeting service.
The major U.S. stock indices took a breather last week and dropped on the uncertainty surrounding the situation with North Korea. Last week the Dow Jones Industrial Average dropped 1.06%, but has already recovered most of this over the past three trading days, gaining back 163.71 of the 222.66 point drop. The
Standard & Poor’s 500 stock index followed suit, dropping 1.43% last week, but rising 1.24% in just three days so far this week. (Google Finance)
Fire and Fury
“North Korea best not make any more threats to the United States. They will be met with fire and fury like the world has never seen,” President Trump thundered late Tuesday (CNN, various sources).
Undeterred, the rogue nation called the president’s warning a “load of nonsense,” detailing how it might attack the island of Guam (Reuters).
Doubling down and answering critics that suggested his remarks might be too acidic, Trump told reporters on Thursday that “maybe it wasn’t tough enough.” On Friday morning, he tweeted, “Military solutions are now fully in place, locked and loaded, should North Korea act unwisely.”
Scary headlines? Sure. Given the fiery rhetoric, however, reaction in stocks has been modest. Following a selloff on Thursday, stocks edged higher on Friday, and continued to do so through Wednesday of this week. Viewing the escalation in tensions through the narrow filter of the market, odds of a near-term conflict between the two nations remain very low.
Safe-haven trades, such as gold and U.S. Treasuries, have also reacted very modestly. In other words, we have yet to see a sharp inflow into assets that might otherwise do well in a time of crisis, or signal a high degree of concern.
In part, the president’s public posturing may be aimed at China, but the market’s more muted response suggests the collective wisdom of the Street does not foresee the war of words turning into a real conflict.
The problem – no one seems to have figured out what the North Korean leader really wants. Still, the market believes that a ratcheting down of tensions is the most likely outcome.
Always remember that longer term, stocks take their cues from the performance of corporate profits, which are heavily influenced by the economy. That said, last week’s action in the market was primarily driven by psychology and was not consistent with the economic fundamentals. Short-term traders thrive on volatility, as they hope to employ strategies that attempt to profitably capture such volatility.
As always, if you have any questions or concerns, please feel free to reach out to us at any time
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