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MARKET-ALERT- Rumblings Up, Down, and Around Wall Street Issue *443 dated August 13, 2017 with Ray Dirks of Ray Dirks Research and his securities analyst and money manager associates, along with the internationally-followed Web Sites and, where Fashion meets Finance, and where Stocks meet Blonds.

Well, Well, Well…Twas another exciting week in Wall Street in the United States, as the Dow Jones Industrial Average suffered its biggest one-week drop since March if this year. Rumblings thinks that this presents a good opportunity for our readers/investors to buy common stocks, using cash available plus funds derived from sale of bonds, both corporate and government, including municipal bonds. Ray Dirks and his associates think that common stocks will move significantly higher over the next six to twelve months, whereas bonds, which are now in a bubble, will probably go much lower as interest rates rise into 2018.

To provide further perspective on this, let’s quote from The Trader column in Barron’s, the Dow Jones Business and Financial Weekly, where the headline reads: Stocks Fall 1.4% on North Korea Fears.

The column starts off: It’s locked and loaded. Are we referring to the U.S. nuclear arsenal, or the stock market?”

President Trump found a way this past week to get under the market’s skin with his colorful comments directed at North Korea leader Kim Jung-un. The president promised to unleash fire and fury, then claimed that the U.S. military was locked and loaded and ready to respond to any provocation.

News that North Korea had been able to build a nuclear warhead small enough to place atop a missile likely would have sunk the market anyway, and sink, it did. The Dow Jones Industrial Average declined 234 points, or 1.1%, to 21,858 on the week, its largest one-week slide since March. The Standard & Poor’s 500 index fell 1.4% to 2,442, and the Nasdaq Composite dropped 1.5% to 6,257.

But pardon us for not quaking in our boots at least when it comes to the market. Geopolitics has a way of shaking stocks, but rarely does the damage last. The S&P 500 dropped 1.1% the day Iraq invaded Kuwait in 1990, according to Strategic Partners data. The index fell further in the next three months, but was up 10% 250 trading days later. Even the Cuban missile crisis in 1962 resulted in only a 6%-plus drop that was quickly erased. It’s a serious situation, says Brad Neuman, investment strategist at fund-manager Alger. But your best bet was to stay in equities.

Stocks are driven by economic growth. For a geopolitical event to derail a bull market, it would have to hamper the U.S. economy as well. That’s very unlikely. I’ve never seen a geopolitical event cause a recession, says David Rosenberg, chief economist and strategist at Glaskin Sheff. Geopolitics can create anxiety in financial markets, but aren’t going to bring the $18.5 trillion beast, otherwise known as the U.S. economy, to its knees.

Ah, yes, the economy. As has been the story since President Trump’s election, confidence remains high. The NF1B Small Business Index rose to 105.2 in July, while the actual data remain sluggish. Productivity rose just 0.9% during the second quarter, and the consumer price index advanced just 1.7%, missing estimates for 1.8%. None of that is exciting, but it doesn’t point to a recession either – the one thing guaranteed to bring a bull market to its knees.

The CBOE Volatility Index rose 55% last week, closing as high as 16.04, the highest level since November 8 of 2016, and greater stock market volatility could be here to stay. But don’t be surprised if stocks manage to rally through it. Michael Block, chief strategist at Rhino Trading Partners, wouldn’t be shocked to see the S&P 500 hitting a new high by the end of this week. Why the optimism? The index finished just 1.6% below its all-time high, and it wouldn’t take much China acting on North Korea, detail of an actual tax plan, or even good earnings from Wal-Mart Stores (WMT) or Target (TGT) to get the market moving higher again. North Korea will blow over. Block says, We could see a rally back.

Rumblings agrees with Rhino Trading Partners and suggests that our readers/investors put as much money to work as reasonably possible in common stocks such as Apple, Inc. (APPL) and Aflac (AFL) from Rumblings’ Favorite Stocks of 2017 List for strong capital appreciation potential in the next 6 to 18 months,

Rumblings also suggests that readers/investors do their due diligence, check with their investment advisers, and place no more than 1% of their investable funds in the securities of any one company. It pays to diversify!

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