Facebook looms, Greek leftists posture, DC dithers

So what else is new? Happy Friday. We need a vacation from Wall Street.

WASHINGTON, May 18, 2012 – It’s 7:10 a.m. as today’s column starts to come to life in Microsoft word. At this moment, Dow futures are up a pretty nifty 49 points. S&P mini looks good, up about 6.5, and the lately beleaguered NAZZ is up some 13 and change. In other words, at least at this precise moment, the market’s tone is positive—refreshing news after this week’s nauseating collapse which yesterday gored even the previously impervious high-yielding REITs.

It’s hard to say why the futures are up at this point. And it certainly doesn’t mean the market will finally close up today, as investors lately have preferred to remove positions on Friday’s rather than white-knuckle their way through a tradingless weekend of headline risk, mainly from Greece and Spain.

The Greek farce becomes more idiotic by the day, the latest example being the idiotic and inflammatory posturing of Greek leftist leader Alexis Tsipras. Mr. Tsipras essentially told the rest of Europe to shut up and keep sending Euros, as they didn’t have any other choice. When that news leaked out to U.S. markets, it merely served to apply another downward goosing to the ongoing waterfall decline. Clearly, this dude is a born diplomat. Meanwhile, the run on Greek banks continued. What a guy!

Hungry birds.

Greek leftists present their latest demands to the Eurocrats.

Over in Spain, bank problems also continued, although the government there, unlike the Greeks, continues to behave like rational adults.

Europe has the same problem in every country, more or less, including Germany. They’ve been living a comfy socialist lie for over sixty years and the bill has finally come due. And nobody wants to pay it or do what they need to do to get things back on track. It’s an absolute refusal to deal with reality, which is only going to make things a lot worse before a solution is forced.

We’re experiencing the same kind of head-in-the-sand leadership here in Washington, as personified by Senate Majority Leader Harry Reid. As stupid as Nancy Pelosi and Barack Obama are mendacious, Reid’s solution to everything is to do precisely nothing and then blame the consequences on the Republicans. This week, after the Senate voted down by a bipartisan 99-0 the Obama Administration’s laughable FY 2013 “budget,” Mr. Reid once again refused, for the third year running, to offer any budget whatsoever.

This is an unprecedented abdication of leadership at precisely the wrong time. But Mr. Reid and the Democrats don’t care, feeling that it gives them yet another chance to demagogue against the Republicans, who, of course, lacking control of Congress or the White House, can’t actually do much anyway.

All this has a severely negative effect on the market, which continues to sink, led by downward spiraling materials, commodities, and fuel prices. It’s a clear sign that, in combination with Chinese malaise and European fecklessness, deflation is once again lurking not far in the background which means that the Fed, in spite of this weeks cautious statements, may again have to open up the spigots as politicians everywhere have consistently refused to do their part in any way, shape, or form.

In fact, just for jollies, consider the Obama Administration’s hints yesterday that it may open the taps of the Strategic Oil Reserve. Why on earth would anyone even suggest this, given that the per-barrel price of benchmark U.S. West Texas Crude has plunged roughly $15 over the last couple of weeks, just prior to the Memorial Day kickoff of official driving season?

Prices at the pump are declining noticeably across the country, except in the Socialist People’s Republic of California, which has other issues. The Administration’s belated faux-response is pure politics, obviously, but it comes about six months late, and well after the President put the kibosh on the real solution, the Keystone Pipeline. These people are more inept than even Jimmy Carter’s people were, even on a bad day.

Picking up on yesterday’s “Fuhgeddaboudit” meme, maybe the characters in the 1997 film Donnie Brasco actually have a finger on the pulse of the Obama zeitgeist:

Back in the land of the living, gold, which has been tanking for nearly all of 2012, showed signs of life yesterday at last, a sure indicator that the world has gotten so scary, it might be time to restock those investment shelves with the yellow metal again to hedge against global disaster. We may get follow through, at least today. Again, it may be largely a matter of weekend trading insurance.

The one potential bright spot this morning—the opening trade of Facebook (FB) on the NASDAQ—continues to get 24/7 hype on CNBC this morning. The network really had ought to be ashamed of itself for mercilessly flogging a stock that doesn’t need it. In our related Prudent Man column yesterday, we explained in brief how IPOs work and how this one might unfold. Dave Fry of “Dave’s Daily” has an even more acidic view of the proceedings:

“It struck me as odd knowing how much money is at stake in underwriting fees and newfound wealth set against a rapidly collapsing stock market. You probably know how these deals like Facebook get priced and distributed. The underwriters and selling group members have been twisting arms and issuing ultimatums to institutional clients—you are to take “x” number of shares or you’ll never get another deal again. That’s the way we roll. So as billions are about to be made by underwriters and insiders, Main Street is losing its collective shirt in the current stock market plunge. It’s quite a disconnect frankly.”

Yeah, it is. That said, the Facebook IPO is probably what’s driving the futures this morning. So great is the ridiculous frenzy whirling about this offering—which should open for trading circa 11 a.m. EDT—that bulls might actually be able to make use of the positive buzz to lift the markets, at least temporarily, out of their collective swoon. Options expiration day today will make this a bit more complicated with all the confident bearish bets strewn about. But stranger things have happened.

At any rate, we’re back to Anything Can Happen Day again. Our parting advice is this: Continue to keep your powder dry. Stuff your available in your mattress. And DO NOT CHASE the shares of Facebook you couldn’t get when the market opens. You’ll be left holding the bag when the big boys collectively flip those shares, if not today, then later in this quarter when the lockup of restricted shares expires. There’ll be another day if you really want these shares. But more than likely, that’s not today.

Have a good weekend anyway.

(Usual caveats apply to this article, which should not be construed as a recommendation to buy or sell anything. Travel at your own risk, keeping in mind that the current market environment is very, very risky. There are dragons out there, so watch out. We’re actually on your side. Not too many people can say that with a straight face these days.)

 

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

 


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Terry Ponick

Now writing on investing, politics, music, movies and theater for the Washington Times Communities, Terry was formerly the longtime music and culture critic for the Washington Times print edition (1994-2009) before moving online with Communities in 2010.  

 

 

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