Today is Columbus Day. The Treasury market is closed. The stock market is open. That's probably how a lot of people would prefer it, too, considering the Treasury market has been weak while the stock market has been strong and, well, fun for a lot of participants.
There hasn't been much standing in the stock market's way of late, as it has been one record high after another. Friday was an exception, but only barely so as the S&P 500 slipped less than three points after climbing 124 points, or 5.1%, since August 18.
What was lost on Friday, though, could soon be recovered.
The S&P futures are currently up four points and are trading 0.1% above fair value. The Nasdaq 100 futures are up 16 points and the Dow Jones Industrial Average futures are up 42 points.
There was nothing over the weekend, apparently, that stock market participants interpreted as upsetting the bullish order of things.
The fact that North Korea didn't conduct a long-range missile test, as had been rumored, is being spun as a positive for the stock market, yet that's a reach to stretch for a narrative to match up with the disposition of the futures market.
To that end, it would be remiss not to add that President Trump said there is "only one way" to deal with North Korea, which doesn't sound like a peace overture on the surface of things.
Anyhow, the point is that the stock market's bullish bias is still intact despite a number of political dealings that are fraught with uncertainty (eg. tax reform, North Korea, Turkey, DACA, Catalonia, Brexit, etc.).
The stock market, however, isn't worrying too much about the unknown. If anything, it is behaving in a way that suggests the unknowns will be resolved in a favorable manner and is focusing instead on the known planks of low interest rates, continued earnings growth, and a pickup in global economic activity.
The third quarter earnings reporting period will have its official start this week. S&P 500 earnings are expected to increase just 2.8%, down from an estimated growth rate of 7.5% on June 30, according to FactSet.
That's not a lot of earnings growth, but as alluded to in our earnings preview, the market is seeing through that low growth to the higher growth of 11.1% projected now for the fourth quarter. Moreover, it seems to be banking on the passage of a tax reform plan inviting a higher earnings growth rate next year.
The start of the earnings reporting period will be a focal point this week along with some key economic data at the end of the week, which includes the Retail Sales and CPI reports for September.