WASHINGTON, May 23, 2012 – One of the problems writing this column lately is that each morning this writer sits down at the ol’ MacBook and starts to dance on the keys, what comes out feels as if it’s been plagiarized from the previous day’s column. Let’s see…this morning, market futures are pointing to a lousy opening, and, hmmm, it all seems to have something to do with Europe, Greece, and maybe more Facebook IPO scandal.
Yesterday, a Greek spokesperson leaked yesterday that they’ve seriously considered abandoning the Euro. That immediately torpedoed a nice rally, even though European politicians quickly moved to “explain” what was really said. Same old, same old. Will this influence today’s market open?
Yep, bingo, the market just opened and we’re already down 64 Dow points. Now 84.
It’s just like a move that plays over, and over, and over again, like Bill Murray’s “Groundhog Day,” except without the delectable Andie McDowell, whom you now see on cosmetic commercials again and again and again. Like the Energizer Bunny. But we’re mixing similes.
You hate to be reduced to writing a one or two sentence column, but that’s been the gist of it in the current market, where even a momentary hope of bullish joy is soon quashed by feckless Euro-pols, desperate and clueless Greeks, an entirely dysfunctional Washington, and…reality itself. Markets are going nowhere fast, except maybe down. And it looks like they’ll keep on doing so until Western politicians and their constituents realize that the massive old Ponzi scheme that’s kept the West’s faux-socialism going for fifty years is dead and gone forever.
Good luck with that. Every time somebody gets close to telling the truth, somebody else does a hard reset. Currently, that guy is Congressman Paul Ryan. These day’s, he’d be better off quitting his job and moving to Hollywood where he’d be the perfect guy to star in a remake of “Groundhog Day.” Whenever he floats another realistic proposal for straightening things out, the Democrats and the media bitch slap him back to his office in the bowels of the Longworth Building.
Maybe Western politicians should consult more closely with Valery Putin, who’s recently stuffed ballot boxes, Philadelphia-style, to install himself back at the top of the Russian thugocracy. Being an old-style Commie, Mr. Putin could teach the West a thing or three about how to run a repressive Marxist state. Perhaps he could even induce Harry Reid to propose a five-year plan—a good idea since, under Mr. Reid’s pathetic version of leadership—the Senate hasn’t bothered to cook up even a straw budget for three years.
All this is simply no good for the market. “Groundhog Day,” Energizer Bunny, broken record—whatever simile or metaphor you use, it’s apt. Wash, rinse, repeat. The market’s likely to stay in its downward-spiraling rut until we can remove one of the elements—any one—from the current repeating movie.
Investors should consider mostly steering clear of the market for now. Utilities may be a good bet, as the Obama policy of raising the price of fossil fuels has temporarily backfired for the moment, leading to downward trending prices in oil, gas, and coal, the industry’s main fuels. But even REITs are getting hit lately, mostly due to the gathering fear that our out-to-lunch Congress will allow the current tax regimen to expire, leading to a kind of Taxmageddon on January 1, 2013.
One possible defense, which we put on yesterday, is the short side of the market. We’ve put on small ETF positions shorting the S&P 500 average (symbol SH) and shorting the Euro via a double speed inverse (short) ETF (symbol EUO). But we’re not doing anything with much conviction.
Sort of like all our politicians right now.
We’re seriously contemplating going Galt at this point. We know for a fact that a lot of businesses and individuals already have. Reminds you of that old line from T.S. Eliot: “This is the way the world ends / not with a bang but a whimper.”
Let’s close by consoling ourselves with a classic clip from “Groundhog Day.” (Stop us if you’ve already heard this one.)
Disclosure: Terry has taken small positions in SH and EUO.
Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate.
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