Relief Rally Ends Correction Risk

Today's powerful relief rally in the stock market was fueled by news that President Donald Trump intends to declare victory in the war with Iran, according to an article in this morning's Wall Street Journal. Around noon, the market moved higher still on a report that the President of Iran said his country is ready to end the war if the US agrees to its 5-point peace plan. Then, after the market closed, around 6:30 pm EST, Trump told reporters that the US would be leaving the war zone in 2-3 weeks. His press secretary announced that the President will deliver a formal Address to the Nation Wednesday night at 9:00 pm. He certainly won't be accepting the Iranian plan, and he seems ready to withdraw without Iran accepting his 15-point plan, which includes opening the Strait of Hormuz.

If Trump is declaring mission accomplished, then so are we regarding our stock market correction call. We will probably lower our recession odds from 35% back to 20% once we have a better handle on whether the conflict in the Persian Gulf is actually over. We reserve the right to change our minds as often as the President does. Nevertheless, we have maintained our 7700 S&P 500 year-end target and our commitment to our Roaring 2020s base case.