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Hi.  Peter Navarro here with the economy and market rap for the week ending October 13, 2023; and this was one of the strangest weeks I’ve seen in the stock and bond markets in a very long time.

Recall from last week’s missive, I noted a strong bullish reversal in the S&P 500 at the end of the week.  After eight weeks of (correctly) calling a bearish downward trend, this reversal warned me off of any notion of shorting the market and reinforced a pure cash call. 

Absent further news, I fully expected this week to be in the green for the bulls anticipating a continued downward trend in inflation, no Fed rate hike in November, a continued strong jobs market, and an above trend 3rd quarter GDP growth rate that would augur well for corporate earnings.

Over the weekend, however, the Hamas hit the fan in Israel with the most brutal forms of atrocities.  This has triggered all-out war in the Gaza Strip, the specter of another Arab oil embargo, a further drain on both the US arsenal and budget because of anticipated aid, and yet another refugee crisis.  

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