Lately I’ve read quite a few articles comparing the fall of Kabul to the fall of Saigon in 1975.  In both cases the markets seemed to miss the impact of the political falls, and to act and react somewhere close to ‘normalcy’, whatever that means today. Stocks opened the day after all of the messy TV coverage a bit lower, but nothing out of the ordinary.

There was a time when even a single terrorist shooting caused striking selloffs but that time appears to have passed. Markets have plenty to worry about. Yes, that’s true. But an event halfway around the globe seems to have zero economic significance, at least for the moment.

I’ll admit that I got on the phone to visit with a client who spent ten of the last 20 years as a special forces operative in Afghanistan to see how much impact it had on him. He was sad to see it end this way (as I would suppose most of us are) but life goes on.

Opinions, and feelings will vary about of our two-decade presence in Afghanistan. Still, most will agree that it’s more than a shame that with thousands of Americans and locals dead, along with trillions of dollars spent, the US leaves and the country appears to be headed back to where it was before 9/11.  Soviet Russia learned in the 80’s there is no mission complete when leaving that country. It’s not only the Russians either. Some say Afghanistan is where great empires go to die. It’s very sad.

What I find most interesting is that geopolitical events do not seem to have any market impact anymore.  Perhaps that’s because the Fed’s arm on the scale is so dominant in market behavior. That’s not necessarily good or bad, it just is.

As we have said before, it would not be unreasonable to expect a bit of a pullback in markets, as often happens around the end of the summer. We do not expect, however that it would be the end of this bullish market.

So, the main takeaway is this: There are lots of things to worry about in the world today, but as far as markets are concerned, geopolitics – as of yet –is not one of them.

Ron’s Market Minute 8/20/2021 — It Keeps on Keepin’ On

Although it’s surprising to some investors, (especially the bears!) the market indexes are generally continuing to work their way higher. It may be by merely a few points a week, but higher is still higher. You’ve heard us talk about advancing markets climbing a ‘wall of worry’ and that appears to be what is happening. There’s plenty to worry about, and yet we’re getting more record highs.

For those of you who’ve been asleep for the earlier part of this year (AKA Rip Van Winkle) or at the beach with no cell phone service or internet, there seems to me to be one main reason for these record high closes. That reason is record high earnings! That’s really good earnings, no actually surprisingly good earnings! No, make that surprisingly really, really good earnings. 

Everyone on the planet (who pays attention to corporate earnings) expected this quarter’s continuing parade of corporate results to be strong, particularly when compared to the crisis of 2020. However, very few people expected Corporate America’s VERY upbeat outlook about future earnings to be this strong. 

Remember, the stock market doesn’t care about what is going on NOW, particularly when ‘everyone knows’ what it’s going on. You’ve undoubtedly heard that something ‘everyone knows’ isn’t worth knowing. We’ve said this a time or two before and it bears repeating. The markets are a discounting mechanism. And that means that the market cares much less about what’s happening currently, than it cares about what the outlook for the future looks like. And at the moment, the market is looking ahead with very positive expectations.

Ronald P. Denk, CFP®
Investment Advisor
Denk Strategic Wealth Partners
10000 N. 31st Avenue, Suite C-262
Phoenix, AZ 85051
Phone (602) 252-8700
Fax (602) 252-8701
Toll-Free (877) The-Denk


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Ron Denk is a Registered Representative, offering investments through Lincoln Financial Securities Corporation, Member FINRA/SIPC.

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