WASHINGTON, Sept. 20, 2012 – Futures are not so hot this morning in what has so far been a very tepid options expiration week. Even yesterday’s fairly bullish upside run suffered from investors’ remorse and fizzled back down to close up little better than a dozen Dow points. I remember a pair of lines from an old, once-popular play: “Guess get up and go, got up and went.”
With all the stimulus talk coming out of Europe, the U.S., and even Japan, ZeroHedge is observing the same market in action, which “has everyone wondering, now that QEternity is priced in, what next?”
The market may also be looking East to the trouble brewing in China where, for example, a cadre of anti-Japan demonstrators allegedly “broke off” spontaneously from the main pack and attacked the car of the American ambassador, even as our Defense Secretary was making nice with Chinese political officials elsewhere. A “spontaneous” demonstration in China? Who’s the media kidding? This was an officially sponsored provocation meant to show the Chicoms’ contempt for U.S. foreign policy in that neck of the woods.
With this thuggish nonsense coming on the heels of Russian President-for-Life Valery Putin’s saber rattling and the ongoing chaos in the Middle East, President Obama’s naïve and feckless excuse for foreign policy has gone straight down the tubes, although the press has moved this far away from the headlines so you won’t put two and two together.
Evidence of this pops up in the latest nonsensical Pew poll, which has Obama running eight points ahead of Mitt Romney. Also “in the Pew poll, Obama was favored, by 53 percent to 38 percent, as the candidate who would make wise decisions on foreign policy.” The whole thing is laughable outlier, obviously oversampling Democrats by at least five points which games the results, all part of the push-polling game where lying polls are meant to demoralize the challenger and mask what’s really going on.
Either that, or the average American voter has been rendered completely stupid by this country’s nonexistent public education system. In any event, after the past ten days of foreign policy disasters, this country is in bad shape internationally, which scarcely tracks with Pew’s outlier foreign policy numbers.
We dwell on this because these collapsing international dominos seriously threaten our own so-called economic recovery, which, if it even exists, is on life-support. If voters can’t see that this kind of existential threat to their own economic well-being, they’ll certainly deserve the President they get this year, much as the got all the hope and change they bargained for in 2008. Depressing, really.
And we suspect the markets are looking at this, too, and not feeling so hot this morning. The only bright spot, weirdly enough, is in the futures market for oil which, after tickling $100 per barrel roughly a week ago, has tumbled to $91 and change this morning—a huge drop.
Like you, we’re not exactly seeing this reflected yet in prices at the pump, which never go down as fast as they go up. But in the last three days, at least in the Maven’s geographic area, prices vary widely.
Due to some travel to inspect real estate holdings, the Maven was on the road Monday and found pump prices in West Virginia’s Eastern Panhandle at $3.98-3.99; the same in Maryland’s Western Panhandle; but as low as $3.69 in always-a-bargain Winchester, Virginia, only 30 miles or so from those West Virginia prices.
Meanwhile, attending an interesting play last night in Arlington, Virginia, just across the road from DC, the Maven was astounded to see pump prices up to $4.04 in the Shirlington neighborhood. Wowser. (Prices are for regular, BTW.)
What gives? The pricing of oil, gas, and other fossil fuels has always baffled the Maven, frankly. And the prices at the pump are always gamed by the oil companies, which, clearly, redline certain areas, adjusting pump prices to handle even minute variances in cities, counties, and neighborhoods. States get involved, too, jacking taxes up (and rarely down) for any variety of reasons, usually involving road construction.
In any event, the Maven can’t get to Winchester every day for gas, but even here in semi-trendy Reston, Virginia, prices were down to $3.89 last night, a far cry from Arlington.
Which gets us back to oil futures, which lately we are understanding about as well as prices at the pump. That run-up about ten days ago may very well have had to do with Iran acting ugly again. (And they launched one of their Russian subs yesterday out somewhere near the Straits of Hormuz, a nasty, threatening development.) But as of today, at least, that seems to be old news, with a surplus of oil (again) at Cushing, Oklahoma getting the headlines and depressing the prices.
What the Maven is trying to say, he thinks, is that the world is dangerously out of control under a President who won’t exert any leadership at all except for maybe juggling carbon credits and giving the EPA the power of a Hugo Chavez to mess with our own fossil fuel extraction and possible energy independence.
The world may “hate” American presidents who wear cowboy boots. But the world has become, arguably, a more hateful place when it’s run by a President who doesn’t lead. All this adds to the mass quantities of existing uncertainty in the markets, which makes for a very treacherous investing environment. A confused international situation is not one in which you can make easy money. And that seems to be what the futures are telling us this morning.
As we’ve already mentioned in other columns, the latest run up in the market has been fun. So maybe it’s best to continue to take stuff off the table and raise some cash. We pulled our gold and silver positions a couple of days ago to take profits, and our timing was pretty good, missing the peak by only one day. Precious metals tumbled almost immediately thereafter. Now that events seem to be conspiring to stabilize those prices, however, even as we take more profits in other positions, we think we’ll start scotching back into some gold and silver again by the end of the week as a hedge against the unknown outcomes of events happening very far away. You never know.
Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate. He intends to nibble on the preferred stocks mentioned above as the occasion warrants.
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.
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