Conventional wisdom? Tell me something I don't know? Or totally jarring.
That's what I am trying to figure out about Syria and the possibility of a special prosecutor firing. Let's puzzle over these.
You have to go back to Oct. 20, 1973, to see what happened after President Nixon decided to fire the special prosecutor investigating Watergate. The prosecutor himself, Archibald Cox, like Robert Mueller, was considered beyond reproach. Cox was a professor at Harvard Law and one of the keenest, objective legal minds in the country. In a fated Saturday night, Nixon reached out to the Attorney General of the United States, Elliott Richardson, to fire Cox as only the AG, not the president, had the right to terminate Cox. Richardson quit rather than do so, as did his number two, William Ruckleshaus. Finally, the number three in the department, Solicitor General Robert Bork, at the behest of his commander in chief, did the deed. Why do we care? Because the so-called "Saturday Night Massacre" began a terrible slide in the market, with the Dow plummeting from 987 to 788 in a few months' time, a devastating percentage loss.
The firing eventually helped the groundswell build for impeachment of the president. Now Trump holds a majority in the House of Representatives right now, but if he proceeds with his own Saturday Night Massacre, which seems increasingly likely, the result could be less threatening to the markets, but it sure can't help them.
Then, with Syria, we have to be concerned not so much about potential devastation of the Syrian capital, Damascus, we must also be cognizant of what some say are 8,000 Russian advisers to Bashar al-Assad who allegedly gassed his own people. Trump wants to distinguish himself from his predecessor who said gassing would cross a red line that would demand military retaliation. Again, this would inject a level of uncertainty into a market riven with just that right now.
The problems I mention, though, have been talked about endlessly. And they are going up against the start of the earnings period where we think about the numbers, not the macro. The issue I have, though, is the timing. Both political and military events could cause interest rates to go down, a flight to quality, just when the banks which report Friday need higher rates. We should also expect oil to keep spiking, giving us higher gasoline prices and a headwind for oil users like the airlines and the cruise ships, both important to the transports and the psychology of the markets.
I don't want to sound callous or cavalier, but I am not a political guy. I am, however, someone who does try to divine what these events might do to the market and it's not anything that, to me, seems positive. But they don't seem positive to anyone, so there is what I call "the obvious risk" which comes from events that have nothing to do with the price-to-earnings ratio of what we will pay for Bristol-Myers (BMY) , other than something positive, a decline in Treasury yields.
Ultimately, what do you do? I think these are cash-raising situations and that's exactly what we have been doing for the charitable trust, which you can hear about at today's 11:30 club conference call. We also will discuss the possibility of more Chinese trade tensions, something that hasn't gone away even as many think President Xi's soothing words the other day put an end to the debate.
So, despite the obvious and the start of what should be a very good earnings season, I think that if you haven't put money to work during this recent downturn it pays to wait to see how things shake out, even as we should expect what will be considered jarring events by those not paying as close attention to the markets as we do. Concerned, anxious, but not devastating to the markets as currently configured, just disconcerting for the moment, and not something that the bulls can ignore.