The market got through the news from last weekend unscathed, but now we have to contend with the news from this weekend.
We saw a gradual degradation throughout Friday's market session as we waited for President Trump's military answer to Syrian President Bashar al-Assad's gassing of his own people. We were also concerned about what former FBI Director James Comey might say Sunday on ABC's 20/20. And of course, there was also the new powder keg of the FBI's raid last week on the offices of Trump's personal lawyer Michael Cohen.
Well, we didn't have long to wait on Syria, as the United States, Britain and France on Friday evening attacked three sites thought to be the epicenter of Syrian poison-gas manufacturing. Meanwhile, the Comey 20/20 interview Sunday was damaging, but nothing new. The Cohen debacle? There was nothing more heard from over the weekend.
So, perhaps the market breathes a sigh of relief on Monday and rallies. That's terrific for the bulls, except:
- Assad was quickly seen laughing with Russian advisers about how limited a response Trump's attack was. Therefore, we can presume that he might go right back into action with chemical weapons as soon as he can rebuild his arsenal. In the meantime, Assad is already attacking his enemies with conventional weapons again.
- Comey is going on a book tour, where you have to assume more details and revelations about Trump might come out every day. And there will be plenty more "Comeys" if his book sells well.
- The Cohen newsflow hasn't even started. We can assume the government will soon have even more documents that it can use against Trump.
In other words, none of these situations is over. Do we really think that this president isn't going to react to the taunts of Assad, the Russians, Comey or the Justice Department raid on Cohen's offices? Isn't it a little ridiculous to think that these are all "one and done"?
What does this mean for the markets? Well, the one thing I know it is that we're going to have this backdrop of instability every day and twice on the weekends (Saturdays and Sundays). Yes, I think this could be an overhang, because the challenges Trump faces are pretty grave -- and love him or hate him, his responses will most likely be measured.
But do we really think the jobs of U.S. Attorney General Jeff Sessions, Deputy Attorney General Rod Rosenstein or special counsel Robert Mueller are all safe? Sure, they might be. But the specter of them not being safe will be with us for some time.
Frankly, this reminds me in many ways of when Iraq invaded Kuwait in 1990. We didn't know when the United States would respond, but you knew that something would happen. So, the market sold off every Friday and then went higher on Mondays when nothing happened over the weekend.
This went on from July 1990 until the First U.S.-Iraq War started in February 1991. During that time, the Dow industrials went from 3,000 to 2,368, as they almost always went down more on Fridays than we recovered on Mondays.
Could we be in for the same thing now? It wouldn't be unusual to expect that we sell off on Fridays as we ponder the consequences of what could happen over the weekend because of these events (and others that no doubt await us).
Because of these overhangs, I think that we have to expect something happening again this coming Friday. Of course, we already have a big earnings day coming this Friday, with Honeywell (HON) , General Electric (GE) , Procter & Gamble (PG) and Schlumberger (SLB) all expected to report results.
All I want to accomplish with these thoughts is to remind you that we might have to experience jitters on Fridays because of the litany of concerns around this president. Keep this in mind as we go through each week until all of these things get cleared up -- if they can be cleared up, given what seems like their ongoing nature.
"One and done" on Syria -- really? Presidential attacks and subsequent Twitter ripostes -- do you really think they're over?
You get it. If this is a similar (but obviously more benign) pattern to what we got in 1990, we'll need to be wary of Fridays.