When a President is in Trouble Markets Can Also Be In Trouble

President Obama is in deep trouble with respect to his geopolitical strategy. He faces launching a symbolic attack on Syria that won't accomplish any real political goal in terms of stopping the chaotic bloodbath there. Launching the cruise missiles will only intensify a sense of danger in the Middle Eastern oil producing nations and drive the price of oil to a level that will negatively impact the US economy's rate of growth. And if Obama doesn't act, there will be a sense  of American power receding in the world.

This is not similar to the invasion of Iraq by NATO  forces in a speedy destruction of Sada Hussein's armed forces for a proclaimed military victory  that actually spiked the stock market averages for a while. This is a time of danger that threatens the stability of the Middle East. Should the price of oil skyrocket back to its 2008 peak of $148 a barrel, which some bears are predicting, and should gold rise to the ridiculous price of $3500 an ounce as Citigroup Citigroup just predicted there  will  be  less conviction about equity prices.

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Another major uncertainty is the identity and policy of the next Chairman of the Federal Reserve. The whole muddle over the proposed taper, its uncertain timing and extent has caused "market action to be tepid and without conviction," says David Kotok, chief investment officer of Cumberland Advisors in his market commentary today. As well, I was chagrined to see that most of the equity income mutual funds and ETFs are yielding less than the return on the 10 years Treasury note. Could Syria be the Achilles heel of the 4 year bull market? Kotok reports that  Cumberland's ETF Equity managed accounts entered "Labor Day weekend in the highest cash position we have seen in years."

President Obama is in trouble on many other grounds. His healthcare program is under attack at the same time he has made no progress on other legislative programs dealing with immigration and gun control. Despite the positive news of 2.5% growth major corporations don't seem to be hiring full-time workers.

President Obama is in trouble because the cost of servicing a mortgage has jumped 150 basis points in a matter  of several weeks and home sales seem to be slowing.