Political Risk Takes Down the Bull in Early Trade

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A weekend filled with HIGH drama in Asia and Washington has S&P 500 futures off 10 handles in the first few hours of this week’s trading session.   We essentially have civil war breaking out inside the Executive Branch of the United States government.

“A phrase I keep hearing from Trump ally after Trump ally: “deep state.” Growing belief inside White House that elements of their own Intelligence Community are aligned against them.”

Robert Costa, Washington Post

Headlines Over the Weekend

FBI asked Justice Department to refute Trump’s wiretapping claim – CNN / NYT

Mark Levin on Trump Wiretapping Claims on Obama: ‘The Evidence Is Overwhelming’ – Brietbart

Trump angry and frustrated at staff over DOJ Head Sessions fallout – CNN

Obama faces Congressional Inquiry. Congress to probe Donald Trump’s explosive claims Barack Obama wiretapped him – Drudge

Geraldo: Obama operatives planted landmines for Trump – FOX

S&P 500 Futures – ES1

SPX 30 Min

After the weekend punches thrown in Washington, the S&P has violated its one month trend line.  Today, our friend Niall Ferguson noted in The Sunday Times:

“The House Republicans have a 200-day plan as follows.  First, regulatory reform, including repeal of the Dodd-Frank banking act and deregulation of the energy sector. Second, the repeal of Obamacare and its replacement with a more competitive market-based system. Third, comprehensive tax reform, including lower rates on personal and corporate income tax, a new border adjustment tax (BAT) and abolition of the inheritance tax.”

U.S. equities are up on a ledge on hopes of an aggressive 200 day agenda, this weekend’s ugliness in Washington throws a money wrench into those plans.  Distractions are high, toxic relations between Dems and Rs higher.

Join our Larry McDonald on CNBC’s Trading Nation, this Wednesday at 2:20pm

Don’t miss our next trade idea. Get on the Bear Traps Report Today, click here

Asia Risk Off

Stocks in Tokyo and Seoul fell and the yen strengthened after a North Korea missile launch, while investors also weighed messages from China’s National People’s Congress and Federal Reserve Chair Janet Yellen.

Dollar Yen, Risk On Takes a Break

Dollar Yen 3Many market participants look at dollar yen as the ultimate expression of a “risk on” or “off” mood.  A stronger yen has a lot to do with the current flight to quality and political risks on the rise.

U.S. stock futures were also lower on geopolitical risk surging in Asia.  Prime Minister Shinzo Abe said the government will hold a National Security Council meeting today after North Korea fired four ballistic missiles. The move comes as South Korea and the U.S. undertake annual military drills that Pyongyang has called a prelude to an invasion. Tensions have been rising over North Korea, which also conducted a missile test during Abe’s state visit to the U.S. last month and is suspected of being behind the assassination of its leader’s half brother in Malaysia. – Bloomberg



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