Thoughts {08.10.17}

War of words keeps ratcheting up between the US and North Korea as that country continues to make threats against the American territory of Guam.  Everybody is now focused on this crisis which in my mind now means that the markets and investors are starting to game the probabilities into the system.  Stocks are down two days in a row now and looking to be down a third at least at the open.  However, we have not seen a serious break yet so perhaps markets see more bark than bite in the rhetoric.  The play right now belongs to the North Koreans and we'll have to see what is their next move.  

Corporate earnings continue to post very good numbers.  The year over year increase is something like 10% right now.  On average companies have been basically positive about  at least the upcoming next few quarters.  I've said this before but these sort of numbers are not indicative of a slowing economy and anybody trying to argue that things aren't looking good from an overall economic perspective isn't looking at earnings.

Go read "Three Days that Changed Modern Life".  It's about three events each that happened on different August 9ths in 1945, 1974 and 1995.  Many will get what happened on August 9, 1945.  Some maybe recall the events of 1974 but very few will understand the reference to 1995, even though it may have the most profound societal implications for the modern world.

The markets are all down on average about half a percent as I'm putting the finishing touches on this post so maybe the events in Asia are starting to have a greater impact then I initially thought.  However, I'd also note that markets have had an extremely good run of it this year.  In particular we've seen nice returns since the beginning of summer.  Markets are overbought and while the concerns over North Korea are real they could also be just an excuse for folks to take some profits off the table.  Time will tell.

Back early next week.