"Wounds turn into scars and scars make you tough." -- Aisha Tyler

We Remember

This is always a tough day for me. Every year, I go about my business on Sept. 11. Everyone around us proclaims that we should "never forget", and though it would be far easier to not think about it and far less painful to just let it go away, they are right. We can never forget about our friends lost, nor the impact of them not being there upon the futures of their families. Things changed forever. Our country changed forever. But what was a shock 16 years ago no longer surprises. People who have never met you do want to do you harm. That is the lesson taught. That is why the way you travel, or enter an arena, will never be the same. That is why your guard will never, ever fully relax again. That is why the way we invest even changed. The fact that the financial markets had to close for four days in the wake of that attack and that floor traders worked in smoke conditions for months probably hastened the eventual transition from an open outcry market model to an electronic one.

Today, the aftermath of natural disaster will dominate the headlines. That is current, and is as it should be. For those of us who spent that day in 2001 in the debris field, we will remember it on this day, like it or not. We will remember the firemen moving the other way. We will remember our friends' faces. We will remember the fire, the way the earth shook. We will remember trying to breathe, hearing fighter planes overhead, and the looks on the faces of children as we finally made our way home. It was as if they were expecting each of us to be their mom or their dad. We remember the smell ... that awful, awful smell that I hope I never, ever, catch a whiff of again.

Futures a Poppin'

Equity index futures are rocketing higher this morning. Why would that be? Well, for one, North Korea, instead of launching intercontinental ballistic missiles on its national holiday over the weekend, simply threatened "pain and suffering" going into the U.N. vote on economic sanctions against the rogue regime. So, at least that was a better turn than expected.

Better than expected also seems to be the broad result of Hurricane Irma's run through the state of Florida. Sure, parts of Florida are devastated this morning. The damage done by this storm across the Keys, as well as in Marcos Island, Miami, and Naples will be significant. That said, the storm weakened earlier than had previously been projected, and moved inland earlier than expected. This reduced the impact of the storm surge. I am not trying to say that this storm was not severe. What I am trying to say is that the worst possible outcomes were avoided in many places across the state.

Scenes from Irma.
Scenes from Irma.

Still, the question will be asked. Who is going to pay for this mess? The answer is more international than you might have thought. We are seeing money come out of safe-haven assets Monday morning, and this is at least in part why you are seeing global strength in equity markets. Those markets, by the way, are being led by insurance companies. A little background. First, Hurricane Andrew forced heavy losses upon the state of Florida's insurers in 1992. Then Hurricane Katrina did a number on the state on its way to New Orleans in 2005. After that, many well-known national insurers decided to greatly reduce their footstep in the state to less than a rough 20% of the market.

What most of Florida was left with is a group of mid-sized home insurers that must buy reinsurance in order to broaden out the risk, given that these firms are too small to handle catastrophic losses on their own. In times of large-scale destruction, at certain levels these re-insurers become contractually obligated to pay homeowner claims. These re-insurers, according to an article run by the Wall Street Journal over the weekend would include such firms as Lloyd's of London, Allianz SE (Germany), and Tokio Marine (Japan), as well as the Florida Hurricane Catastrophe Fund, which is state run. Hence, there is a global flavor to the day's "risk on" behavior.

Still Bullish

Just in case you have not noticed, the markets have now survived a whole lot to remain at the lofty levels from where we now survey the landscape. Hurricanes? Check. Earthquakes? Check. Unstable dictator threatening his region with nuclear arms? Check. National leader of the planetary super-power seemingly ill-equipped to deal with the media? Check.

I'll tell you what we do have, which may turn out to be an extreme positive for the marketplace. That same leader reached across the aisle last week in order to ensure that hurricane victims in Texas found some quick relief, and that worries over the debt limit could be delayed for a few months. That pushed out some severe market risk. Not only that, this also puts on display a president that is willing to get things done with whoever else is also willing to get things done. Lost patience in the leadership shown in both houses of the legislative branch of government? Apparently so has this president, which may be the second best thing that he has done for this market after de-regulation. Think willingness to spend.

President Trump had really never been, prior to his campaign, what you would call a fiscal conservative. Now, you can imagine ... spending on disaster relief, spending on the military, even broad spending on infrastructure. This is believable, gang. Adding this new-found flexibility at the executive level allows me to remain bullish. Maybe this spending in the aftermath of disaster is what allows for the continued weakness in the U.S. currency, while the central bank finds the excuse it needs to put off the next rate hike. Maybe this compounded act of intentional stimulus permits the earnings expansion seen over the last four quarters to continue.

This is why I remain net bullish on U.S. equities. "Cautiously" bullish? Oh, you'll hear that one today. That word will be used by cowards. It's either Yea or Nay, gang. We already expect that you've hedged yourself somehow. Don't hide behind extra words. Maggots.

Macro Week Ahead

There may be no domestic macroeconomic data to peruse on Monday. In fact, even Tuesday is rather light. That said, the week is huge for kids like myself, who try to anticipate the way the Fed thinks. Over the second half of the week ahead we'll deal with numbers that display recent activity covering consumer inflation, industrial production, retail sales, and inventory building across the three major lines of business. On top of that, Treasury will auction off 10- year and 30-year paper. Those of you forced to rebuild, I pray for you and your families.

As for the rest of you, either bring your "A game" this week, or go home. There'll be no slackers among us.

Sarge's Trading Levels

These are my levels to watch today for where I think that the S&P 500, and the Russell 2000 might either pause or turn.

SPX: 2489, 2480, 2469, 2460, 2452, 2446
RUT: 1415, 1406, 1400, 1394, 1387, 1376

Today's Earnings Highlights (Consensus EPS Expectations)

After the Close: (IRET) ($0.09)

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At the time of publication, Stephen Guilfoyle had no positions in the stocks mentioned.