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Stock Market Fire and Fury

The S&P made new highs Tuesday getting ever closer to 2500. Then right around noon investors got a case of high anxiety with stocks recoiling a bit, but still in profitable territory.

Just before the closing bell the real fireworks began. That came in the form of some tough talk from the White House that any North Korean aggression will be met with "Fire and Fury".

Since this is an investment publication, we will stay focused on what this means for the market. First, we are used to a lot of bluster from North Korea with no serious action taking place. So, this likely leads to nothing and investors ignore the situation.

Now let's imagine that military action does take place. North Korea is a paper tiger that is easily toppled. (Heck, if you gave me a month with nothing to do, I likely would have a more impressive military arsenal than they do and feed the people and keep the electricity running....but that is beside the point ;-) The reality is that the stock market likes war and typically rises after fighting commences. Some call it a patriotic response by investors.

To be clear, I don't like rooting for war as a catalyst for the stock market. There are plenty of other reasons to be bullish. I just want you to have the correct view of this situation. And that is to realize these issues with North Korea should not cause any continued downside to the market.

Best,

Steve Reitmeister

Executive Vice President, Zacks Investment Research

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