It appears that markets have passed a significant turning point this week. Tuesday’s bearish reversals in major indices were confirmed by continuing declines Wednesday. With the end of earnings season approaching, and what is historically the weakest and most volatile time of the year for stocks, sabre rattling over North Korea appears to have jolted traders out of their slumber. 
 
Considering that people planning an attack usually don’t advertise their intentions, the latest round of threats between the US and North Korea may be talk for now, but have reminded the street that tensions can escalate quickly. Capital has continued to move out of risk markets like stocks, and back into defensive havens like gold, JPY and CHF, all of which outperformed or broke out today. 
 
US indices finished up off of their lows and nearly flat on the day, with the Dow holding the 22,000 level. Disney finished down about 4% while Netflix fell about 1.5% in reaction to the news that Disney will be pulling content off Netflix and launching its own streaming service in 2019. The communications sector underperformed on Disney’s decline plus a 7% plunge in Priceline.  
 
Crude oil had a positive day as a 7 mmbbl drawdown in DOE oil inventories confirmed an improving supply demand balance in the US. Gasoline, on the other hand, lost six cents on a surprise inventory build. 
 
Looking ahead, political developments may continue to influence trading today. UK markets could be active Thursday with trade, industrial production and construction data due for the island nation. 
 

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