WASHINGTON, December 12, 2012 – Our blurry image above was apparently taken from an old kinescope of the 1950s TV show “This Is Your Life,” an often bathetic program that recounted an individual’s past life in photos, home movies, and with surprise onstage visits from unexpected special guests. Our vintage still was taken from an episode of this ur-reality show featuring comic Lou Costello as he encounters his old straight man, Bud Abbott. Seeing this pair together recalls their famous old “Who’s On First?” routine (video at the end of this article) during which Abbott tries to explain the odd names of his baseball players to the utter confusion and consternation of Costello. And that kind of sums up today’s market. Who’s on first? I Dunno.
The Washington political jawboning continued this morning, putting a damper on last night’s optimistic tone. According to CNBC this morning, “House Majority Leader Eric Cantor lashed out at President Barack Obama, saying ‘let’s stop playing games’ and present a proposal to cut entitlement spending.
Continued Cantor, “’We ask the president to please sit down with us and be specific and let’s get that balanced plan’ of revenue increases and spending cuts, Cantor said. ‘There’s an inconsistency here and let’s stop playing games.’”
The President steadfastly refuses to weigh in on any budget-cutting specifics, trying to goad the Republicans to go first so he and his party can then accuse Republicans of pushing grandma over the cliff by reining in entitlements which, of course, desperately need reining. As has been consistently the case for the past four years, destroying the Republicans is far more important to this Administration than putting anything constructive on the table.
Hence, today’s action thus far, with markets moderately up figuring there’s no way there won’t be an agreement before Christmas while also anticipating happy talk about either QE3 part II or QE4 from Fed Chair Ben Bernanke who, Republican denunciations to the contrary, remains the only functional adult in Washington, at least as of this morning.
Anything other than Cloud Cuckoo Land optimism from Uncle Ben will likely hit the HFTs like a bombshell, releasing a barrage of heavy selling as mindless, headline-reading algorithms blast a thin market already mostly devoid of average investor participation and weakened by steady, pre-fiscal cliff selling by insiders and hedge funds who need to unload not only their dogs but their capital gain-laden stocks (like Apple) before year end to avoid almost certain tax increases on investments.
So we’ll keep it short today, as we simply can’t predict the next ridiculous Washington move. But, as residents of the DC area since 1967—minus a 4-year grad school stint in South Carolina—we’d caution optimists. We know this town well, and the prime directive is incumbent safety, followed by taxpayer-funded payoffs to fat-cat campaign supporters—both of which are essentially one and the same.
Ergo, as in Europe, any “agreement” will fleece the taxpayers while promising to address more draconian measures, like facing unsustainable entitlements, some time in 2030 or later, by which time most of the current political perps will be dead or living in the Caymans.
So ultimately, we have to watch what they do rather than listen to what they say. Unfortunately, all the HFT computers do is listen to what they say and move accordingly. Logic tells us that market moves based on lies are also, de facto, lies. So keep that in mind as we move forward.
BTW, speaking of lies, we mentioned that we were queuing up for last night’s IPO of Solar City. Didn’t happen, but allegedly the deal will now be priced tonight. Turns out, confirming rumors, that a revised prospectus was issued yesterday outlining suspicions on the part of the Feds (surprisingly enough) that Solar City had fudged some details in order to get and use Federal loan guarantees.
In the current investing climate, where the vast majority of these taxpayer funded “green” loans and loan guarantees have ended in failure, this has soured the climate for the Solar City IPO. For that reason, underwriters are trying to price the deal down to the point where Solar City still takes in enough money, but prospective investors are happy that the deal is reasonably priced. At this point, it’s 50-50 in our opinion as to whether the deal will come off.
As for us, if the deal is priced tonight but doesn’t look palatable, we’ll take a pass. When it starts looking like the Maven can get all the stock he wants, that means that the fat cats, with their inevitable illegal inside information in hand, already know enough to pass on the deal. After the Facebook debacle, it’s best to take this implied advice and side on the sidelines with the fat cats.
We’ll keep raising cash as we can. If the current suspicious rally actually has legs, there’ll be more than enough time to jump on the caboose and still make some money without enduring the bulk of the risk.
In the meantime, we’ll keep trying to determine who’s on first. If you want a little more insight into this issue, check out the classic Abbott & Costello video below. It’s a metaphor for life in Washington these days.
Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate.
Any positions mentioned above describe this author’s own investment decisions and should not be construed as either buy or sell recommendations. The current market is highly treacherous and all investors travel at their own risk, so caution should be exercised at all times.
Illustrations, charts, commentary, and analysis are only the author’s view of current or historical market activity and don’t constitute a recommendation to buy or sell any security or contract. Views, indications, and analysis aren’t necessarily predictive of any future market or government action. Rather they indicate the author’s opinion as to a range of possibilities that may occur going forward.
References to other reporters, analysts, pundits, or commentators are illustrative only and do not necessarily represent an endorsement of such individuals’ points of view. If specific investment vehicles are mentioned in any article under this column heading, the author will always fully disclose any active or contemplated investments in said vehicles.
Read more of Terry’s news and reviews at Curtain Up! in the Entertain Us neighborhood of the Washington Times Communities. For Terry’s investing and political insights, visit his Communities columns, The Prudent Man and Morning Market Maven, in Business.
Follow Terry on Twitter @terryp17
This article is the copyrighted property of the writer and Communities @ WashingtonTimes.com. Written permission must be obtained before reprint in online or print media. REPRINTING TWTC CONTENT WITHOUT PERMISSION AND/OR PAYMENT IS THEFT AND PUNISHABLE BY LAW.