'Girls Gone Wild' gone bankrupt. Washington next?

Sequester's on. Market down, then up. Government shutdown on deck. Photo: AP file/composite

WASHINGTON, March 1, 2013 – It’s not quite the Ides of March today, but we’re close to the day of doom, or so it seems. In Rome, the now former Pope Benedict XVII has headed off to retirement via what John XXIII once dubbed the helicopterum. Meanwhile, back in DC, the Great Sequester is upon us, and the Journolistas and the President no longer love Bob Woodward (who has the e-mails to prove it). But the effect of this cascading, negative news is predictably destined, even after all the sturm und drang, to end up like Linus’ doomed quest for the Great Pumpkin we suspect: like Godot, the predicted Armageddon never shows up.

Nonetheless, after February’s closing bout of irrational exuberance, aka portfolio “window dressing,” the bears got into the driver’s seat yesterday and smashed stocks down in the final hour, powerfully enough that the selling has carried over into the morning today, the Day of the Sequester. It’s just as likely, however, that the bears caught wind of this morning’s stunning business news surprise: the parent company controlling the sleazy “Girls Gone Wild” soft porn franchise filed for Chapter 11 bankruptcy today. 

Colorful casino mogul Steve Wynn—owner of the eponymous Wynn Resorts (WYNN) sued GGW impresario Joe Francis to collect on a $2 million dollar gambling debt Francis apparently failed to settle with one of Wynn’s casinos, according to a short news item on CNBC online. According to the report, “Francis said Wynn threatened to bury him in the desert. Wynn denied making the threat and sued Francis. The courts gave Wynn a huge award but Wynn hasn’t been able to collect because Francis claims he doesn’t have the money to pay.” 

Wynn, a colorful character who’s a staunch Conservative even as he manages to back Harry Reid in his Senate campaigns, seems like just the kind of straight shooter who might deliver on his promises. So, to head off at the pass any attempt by Wynn to tap into his lucrative film franchise, Francis filed for pre-emptive bankruptcy. We’re pretty much certain, however, that the filing is as likely to terminate Francis’ actual film empire as The Sequester is likely to slow the rate of Washington spending. 

Casino mogul Steve Wynn, left, and ‘Girls Gone Wild’ impresario Joe Francis, right. (Credit: AP file photos by Nick Ut and Chris Pizzello)

No. The sequester, Wynn, Francis, Woodward, and the former pope himself probably have nothing to do with the market’s suddenly sour tone which suddenly, about noon today, reversed itself again, proving for the umpteenth time that Marty Zweig’s warning, “Don’t fight the Fed,” remains a key marker for anyone trying to interpret this very strange market. All the technical charts and indicators are screaming “CORRECTION.” But Uncle Ben keeps filling the punchbowl with highly liquid Benjamins. And so, after periodic kicks in the pants, the market shakes things off and moves higher, gorging on the Fed’s continuing tsunami of borrowed cash. 

The whole phenomenon is kind of scary to this market veteran, but what can you do? The Fed clearly wants stocks to go up, and any lip from a responsible populace will not be tolerated. The whole thing could get rational again if Congress and/or the White House would wake up and decide to act like adults. But this mess is not hurting them, so why should they? They now know that a dispirited and disinterested electorate will likely put them back in office again no matter what they do, so the band plays on. 

It’s a heck of a way for the World’s Greatest Democracy to collapse, but there it is. But as long as the average voter plays local, state, and national elections like another flavor of American Idol, that’s the way things are going to go. 

As for us, let’s try to get rational ourselves and see what we can do today about making money. 

How to play today’s action:

In truth, the honest answer to this question today should be “How do we know?” But we’re supposed to know, or at least take an educated guess, so here goes. 

The market allegedly recovered from this morning’s swoon due to an optimistic manufacturing report along with continued allegedly good news on the housing front. We still think the recovery is due to all the cash that’s flooding the system looking for places to go. As a result, although we don’t want to fight the Fed and have been raising cash, we might have to consider putting some of that cash back to work again, until and unless that mighty correction the charts are all predicting actually comes true.

But today, we think we’ll just sit back and watch. Our oldest and most reliable chart service is showing us short term buy signals only on the U.S. dollar index and 30-year Treasurys, hardly an encouraging signal. Indexes are topping left and right, and DeMark signals, which we track via another investment service, are hitting weekly 9s right and left, which generally means traders should step aside for a bit as the up trends in many areas are about to reverse. 

There’s no guarantee that any of these tea leaves are correct, of course. The Fed’s money machine has been rendering even the most reliable technical indicators inconclusive in this market. Nevertheless, if a hit doesn’t happen today, it will happen soon, because there’s no organic reason for this market to go straight up as long as our current Narcissist-in-Chief still views the economy as a silly game, and his opponents, now including Bob Woodward, as cretins and idiots who should be bowing down before his majesty rather than giving him a hard time for his non-policies. 

It’s clear his game is to make things worse, blame it on the Republicans, and destroy all opposition. Like a good Marxist, this is his primary goal: a one party state. Everything else is incidental. And since he doesn’t believe in capitalism anyway, current results are immaterial to him. 

Thus, only the Fed remains to keep the ship afloat. You can blame them all you want for their idiotic money printing. But, with the now total dysfunction in Washington, their quiet, relentless devaluation of the currency is about the only thing keeping most of us from selling apples on the next convenient street corner.

Thus, aside from adding a bit to our small position in the S&P short ETF (SH) as a hedge against tomorrow, we’re remaining 40% cash with the rest hidden in bonds with maturities of 4 years or less, and a few REITs, utilities, and MLPs. These, too, will go down in any real correction or crash. But they pay swell dividends and will recover first when the fire drill is over, so they’re worth keeping and doubling up on when the eventual correction reaches its crescendo. 

So hedge a little, go home, and enjoy the weekend. We’ll start freaking out about a government shutdown next week when the Administration launches its next anti-Republican Terror Campaign. Meanwhile, we’re going to kick back and enjoy a bottle or two of fine wine in our own “Terroir Campaign.” 

Have a good one. 

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 ar500ticle 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

 


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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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