I have often opined that this extended bull market is just one headline away from a serious correction.
And while we may have gotten a version of that headline from the President’s promise to rain “fire and fury” upon North Korea, “the likes of which this world has never seen before,” it appears that headline may not be enough to stop Wall Street bulls dead in their tracks yet.
But just wait.
We frequently describe gladiatorial combat as the battle between an immovable object and an irresistible force.
The combat that might occur between the U.S and North Korea, or more precisely President Donald Trump and Kim Jong Un, may instead be more like a battle between an unproven president and an irredeemable farce.
However, that does not mean that these two emotionally and intellectually stunted leaders cannot draw us into a catastrophic global conflict.
Both have long been well-known more for their bluster than for their ballistic capabilities.
That, sadly, is rapidly changing. Each has a finger on a button. Each is currently carrying “the football.” Each wants to prove to the world that he has the power to bend his country, or the world, to his will.
In October 1962, the world came dangerously close to nuclear war between, arguably, more level-headed foes.
Misunderstood signs and signals, incomplete, or incoherent communication, coupled with rapidly escalating tensions had President John F. Kennedy and Soviet leader Nikita Khrushchev knocking on the door of nuclear annihilation.
Somehow and miraculously, the two inched toward compromise and common ground that diffused the crisis and left the Cold War world intact. The “missiles of October” never flew, and World War III was postponed. Some hoped forever.
We are, potentially, at a similar crossroads today where two leaders do not understand each other, or worse, are incapable of understanding the Cold War constraint of “mutually assured destruction.”
We are moving beyond a moment where we, somewhat customarily, worry only about markets.
I still believe it’s true that the equities are a scant headline away from a painful moment in stock market history.
That, however, may prove only a footnote to global history if both domestic advisors, and world leaders, fail in their efforts to constrain two of the world’s most fragile egos, who are seemingly hell-bent on destroying the relatively fragile nuclear peace the world has enjoyed for the last 55 years.
Consequently, the markets may be the least of our worries in the days and weeks ahead.
We know a stock market crash can be weathered.
A nuclear winter cannot.