People are panicking, but a market correction of 5 to 8 per cent is natural and actually welcome.
The economy (US and Europe) is going quite good (at least media release estimates, if not the real economy), but in the face of that a series of issues are mounting.
-North Korea/ US – unless an accident happens this issue could linger for a while. Apart the postures, a real confrontation is unlikely as even a minor retaliation of North Korea could cost upwards of 5,000 deaths. And let’s not talk about major. Even if they do not have real delivery system they can explode a nuke close to the border…just 35kms from downtown Seoul,
-Syria. For all the posturing the US is really worried of a serious retaliation from Russia and Iran. As a consequences the flight missions over Syria have been seriously decreased. Also, end of May, an Iranian election will be held and some really hard core candidates are emerging against the current moderate.
-France election is too close to even poll.
And the economy
- Obamacare could not be dismantled
- the tax reform now seems to be slipping to 2018
- The US debt is still there and there is the US Debt Ceiling debate coming
- The US Fed is starting to think how to unwind its multi trillion balance sheet
So if everything goes well, from the top, we are seeing a 5-8% decline. But if something goes wrong for real we could see a 20%+ decline.
No Country for Old rally (bit like the movie)
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