For the third day in the last four trading days, the S&P Index has closed at 2904.
Today the market ignored the following cautionary messages:
* The divergence associated with weakening international markets which are warning investors about a slowdown in global growth.
* A quickening rise in the risk free rate of return (Treasury yields are gapping higher) which is a fundamental ingredient in classical dividend discount models. 
* The growing probability that the Administration's policy is wrong-footed, illogical and dangerous to forward global economic growth/trade.
* The ever more extreme partisanship in Washington, D.C.
* A more isolated president, who is demonstrating self-interest over national interest
* The speculative marijuana fever manifested in TLRY and others (haven't traders and investors learned by now?).
Thanks for reading my Diary and enjoy the evening.

My trading and investment inactivity over the last few days are not a function of disinterest.
Rather, it's reflective of my perception of the lack of predictability in the market action and the rising uncertainties (in policy and in the real economy) that I currently see.

A new high ($37.80) in Comcast (CMCSA) since it was added to my Best Ideas List at $31.35 in May, 2018 - I am not selling any shares.

I am raising my (DWDP) buy point and adding to the stock at $68.35 now.

Besides the strength in equities, the strength in fixed income is conspicuous.
Yields are +5 to +6 basis points higher on the ten year (nearly 3.05%) and thirty year U.S. Treasury bonds.

Even China markets beginning to see tariff bluster a form of negotiating ploy. 

Going radio silent at 1:00. 

- Arthur

I am off to a quick lunch with a couple of Wall Street legends.

Perhaps I will come back with a better understanding of today's market!

This remains a confusing and unpredictable market.

No trades today.

Fun times from Peter Boockvar:

At least for now, instead of getting us closer to the bargaining table with China, we've only pushed them further away as they are likely canceling their trip to the US and are ready to retaliate. The Chinese commerce ministry said "China will adopt countermeasures to safeguard its legitimate rights and interests and the global free trade order." The American Chamber of Commerce in China said "The downward spiral that we have previously warned about now seems certain to materialize...Contrary to views in Washington, China can, and will, dig its heels in." We've threatened to add even more tariffs if China does respond with more of their own and it certainly does seem that we're approaching spiral stage.

Instead of protecting US IP, we've only managed to piss off US business, particularly the tech companies that especially want protections on IP. The president of the Information Technology Industry Council which represents big US technology companies said the tariff decision "is reckless and will create lasting harm to communities across the country." The US Chamber of Commerce has an entire page on its website on tariffs.

Tom Donohue yesterday said there are "less harmful ways to truly achieve free and fair trade with China." The CEO of the National Association of Manufacturers touted higher pay for US workers, new plants opening and more jobs in response to the cut in US taxes "but more US tariffs and Chinese retaliation risk undoing that progress and moving our economy in the wrong direction."

The American Apparel and Footwear Association said last night "During the public review progress, AAFA and many of its members detailed the extreme damage this new tax bill will do to our industry, our nearly 4 million US workers, and to every American family. It seems most of those pleas were ignored. Instead, today's announcement shows a deep disregard for American businesses, American workers, and American families, who will be negatively impacted by this decision. This is a very dangerous game to play, one that will not end with a winner."

Let's add in that this is happening as global monetary policy is tightening. Whoever said 'expansions don't die of old age, something usually kills it?'

A late day rally saved Chinese stocks and helped other markets in the region. The reaction is clear that this trade news was little surprise and considering the damage already done to Asian markets, enough for now has been priced in. Here is a chart comparing the S&P 500 and the Chinese H share index over the past 12 months. Asian stock markets remain inexpensive and very attractive for long term buyers.

* As if!

In a different social setting, Cher (played by Alicia Silverstone) in the 1995 movie, Clueless, uses the above term when describing a girl (Amber) that Tai (played by the late Brittany Murphy) is jealous of.

Well, like Amber, the market over the last few weeks is a full-on Monet:

"It's like a painting, see. From far away it's okay, but up close it's a big ol' mess."

The market's internals are deteriorating and the changing market structure holds modern risks:

* Rev Shark: "Breadth was 2,650 gainers to 4,400 decliners and the number of new 12-month lows exceeded the number of new 12-month highs." 

* Major market sectors - homebuilders, automobile manufacturers and others have no, little or reduced support.
* The market-leading FANG populous is losing some membership (Facebook FB and Netflix (NFLX) ) in the face of the existential threat of anti-trust and other regulatory pressures, and even in the face of a possible deterioration in fundamentals.
* Small cap slippage (which in normal markets is a negative). From The Divine Ms M this morning:"In the meantime I saw an article in the Wall Street Journal on Monday that said small caps had outperformed large caps this year. They had so many statistics my head was spinning. But I went to inspect the chart of IWM relative to SPY and sure enough, the ratio is up since the calendar turned to 2018. The problem is that this article should have been written in June, not now. As you can see, now the small caps have underperformed for the last three months. And if you squint you can see there was a lower low on Monday."

* Finally, the market's structure holds its own risks as the exaggerated short term price action abetted by the growing popularity of ETFs and quant strategies restrict price discovery and hold the market hostage on a daily basis. With so many on one side of the boat, I am fearful that the market without memory from day to day has the potential of morphing into a "flash crash" at some time in the future.
Looking out beyond the near term, a global pivot towards monetary tightening, a new high in political partisanship, an Administration that seems tone deaf and allergic to learning/understanding policy (causing unnecessary first order and second order problems) and the lack of cooperation between the world powers (in trade and other policies) and the dismantling of global policy collaboration, weigh on our intermediate term domestic economic prospects and limit the upside reward for the S&P Index.
Mr. Market is a full-on Monet.

As the speculative juices flow...

I remain short homebuilders - 'Peak Housing.'
The price of lumber closed at a 52 week low yesterday and is down by -45% since May:

Alibaba's (BABA) Jack Ma warns of a protracted trade war between the U.S. and China:

"Alibaba's Jack Ma Warns U.S.-China Trade War Could Last 20 Years"