WASHINGTON, November 14, 2012 – Markets struggled to get a little upside action yesterday. But, as we predicted, the relentless selling showed up mid-afternoon and beat the averages down, once again after the remaining bulls wasted yet another precious round of fire power.
Marty Zweig once famously advised investors not to “fight the Fed,” whose current QE stance is geared, at least in part, to keeping stocks on an upward trajectory. But yesterday, and much of this month, Wall Street has feared the “fiscal cliff” more than Uncle Ben.
Of course, it didn’t help that the Obama Administration’s relentless White House twittering machine* (see inset graphic) kept things tense, as reported by the healthily cynical ZeroHedge:
“In terms of the markets, a late sell-off in US equities led by technology stocks (-0.90%) marked an otherwise quiet day. The S&P500 closed -0.4% lower, after shedding 0.65% in the final hour of the session. This took us to the lowest level since August 2nd. President Obama’s tweet, in the final hour of trading, that ‘I’m committed to solving our fiscal challenges. But I refuse to accept any approach that isn’t balanced’ didn’t help markets hoping for a more conciliatory tone, but probably summed up the state of play of negotiations thus far.”
As a follow-up, the Prez (or likely his surrogates) lobbed out a later tweet, advertising a press conference today, presumably to characterize and spin his latest “tax the rich” efforts which continue to be focused on soaking “the rich” (anyone making over $200-250K) as the one and only way to balance the budget except maybe for hiring the Costa Rican Army** as mercenaries while terminating our own.
As of now, the President and Congressional leaders are supposedly scheduled to meet on Friday to begin “discussions.” But likely, Obama will begin those “discussions” today by putting forth a tax increase so massive that it’s likely to cause the bond vigilantes to start putting on their war paint.
Given that lots of fiscal news will be coming out today, as opposed to yesterday’s relatively news-free zone, the up-opening we expect will probably come under fire as investors get rattled.
Not helping is the increasing spread of strikes throughout Europe. As over here, the European people know what the Euro-governments don’t want them to know—namely that the system is hosed beyond repair. But, like good Europeans, they want their governments to fix things by giving away more socialist goodies. We still have the opportunity here to avoid the level of socialism that put the Europeans permanently under. But, like the Eurocrats, our politicians won’t face reality either, so Greece remains the canary in the coal mine for what the U.S. itself will soon be facing.
Here’s the White House’s latest sweet tweet on the topic:
Watch the President lay out his strategy to stop taxes from going up on 98% of Americans & reduce our nation’s deficit: OFA.BO/YsHFjg— Barack Obama (@BarackObama) November 13, 2012
(BTW, not sure we’ll be able to use that coal mine analogy much longer during Obama II, given the administration’s current anti-coal campaign via the EPA.)
At any rate, given the continuing chaos, we’ll maintain the short positions we set yesterday, even thought they may get hit at the market open. We’re sure there’ll be enough bad news today to send things back down again, particularly as the President opens “negotiations” with Congress by not giving an inch.
Hey, it’s what the people were told they wanted, right?
* According to critic Arthur Danto, “Klee is making some kind of point about the futility of machines, almost humanizing machines into things from which nothing great is to be hoped or feared, and the futility in this case is underscored by the silly project of bringing forth by mechanical means what nature in any case provides in abundance.” Real birds are to mechanical birds as fossil fuels are to imaginary fuels.
** Didn’t catch you napping, eh? Costa Rica, of course, doesn’t have a standing army. Just a little bait for my favorite lefty trolls.
Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate. He is currently long IAU, SMN, QID, FAZ, and SH and continues to hold medium term corporate and municipal bonds.
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.