This
Week in Barrons – 10-2-2016:
Thoughts:
I’m presently at the ATA trucking show where Diane Swonk will be
speaking later today, and as much as I want to talk about Thursday’s market meltdown surrounding Deutsche Bank, I first need
to touch on our own Presidential (media) race because of its market impact.
1. At the last debate, Hillary (in order to ‘stop the
bleeding’ of her own polling numbers) attempted to reinforce how nasty Donald Trump
is toward women. It seems that after
winning the 1996 Miss Universe pageant, Ms. Alicia Machado began gaining
weight. Hillary (on camera) accused Donald of ‘fat
shaming’ her, and this was still further evidence of his being a misogynist pig. Factually however, CNN itself reported on January 29, 1997- Web posted at: 4:15 p.m.
EST - Correspondent Jeanne Moos - NEW YORK (CNN) – When Alicia Machado of
Venezuela was named Miss Universe nine months ago, no one could accuse her of
being the size of the universe. But as her universe expanded, so did she,
putting on nearly 60 pounds. Rumors also
surfaced that she might be forced to give up her Miss Universe crown. But
Trump, as co-owner of rights to the pageant (along with CBS), said he would
never let that happen. CNN
then held a small news conference on the issue, and (well) you can decide for
yourself: http://www.cnn.com/videos/politics/2016/09/27/donald-trump-alicia-machado-1997-3.cnn. My point is simply that we’ve seen this movie
before, as our election draws near – Hillary is going to panic, will stop at nothing,
and therefore expect more shenanigans.
2. Included in the media frenzy are elements such as Michael
Savage’s radio show (The Savage Nation – broadcast across 400 Westwood One
radio stations nationwide / 20m listeners) was mysteriously silenced on Monday
when he was comparing Hillary's fragile health to those actions associated with
someone suffering from Parkinson's disease.
3. But into this election the media has introduced
another issue that is actually more sinister – an example of which is The
Baltimore Gazette: http://baltimoregazette.com/
- “Baltimore's oldest news source and one of the
longest running daily newspapers published in the United States. With a focus
on local content, the Gazette thrives to maintain a non-partisan newsroom
making our content the most reliable source available in print and across the
web.” The issue is that the real Baltimore Gazette went out of
business over one hundred years ago. The
site is FAKE. It’s a site put up
strictly for election manipulation.
Another one is: The Boston Tribune: http://thebostontribune.com/.
My point here is that all
of you have the ability to search out the truth, and prepare yourselves as
necessary. This Presidential fight is
getting deeper, wider and nastier than anyone we’ve ever seen. Criminal? Sure. But
then what isn't in America 2016?
The Market...
What a wild ride this
week. On Tuesday the market celebrated
what many thought was a Hillary win on Monday night, and gained 130 DOW points.
There was no fundamental economic reason
for the ramp, simply what was perceived as ‘stability’ associated with a Clinton
win.
Then on Thursday we fell
190 DOW points, on reports that high frequency traders and 10 Hedge funds were
withdrawing excess cash from Deutsche Bank (DB). They feel the bank is darned near insolvent,
and with the U.S. seeking a $14B fine for mortgage fraud in the 2008 meltdown,
they could fail. So the panic hit, and
everyone sold stocks.
On Friday, things started
out calmer with the market hugging the flat line for hours. Then out of the blue it started roaring higher
on word that the U.S. was willing to drop the DB fine to $5B instead of $14B. So all the panic subsided, everyone felt that
DB would be fine again and up we went.
The truth is that DB is
indeed basically insolvent; however, so are most of our institutional banks. They're simply propped up. The feeling is that Germany would never let it
simply fail, and that they would print as much money as needed to keep it
afloat. I agree that Germany won’t admit
defeat and let DB crash, because it is tied to so many other major banks. With DB’s connection to the third party
derivative marketplace, the crash of DB would bring down the entire global banking
network. But that doesn't mean DB is
healthy, nor that the world’s systems are healthy. It simply means that they'll conjure up any
means via band aids, bailing wire and zip ties to keep things creaking along. This is NOT a picture of health.
So on Friday we regained the
Thursday loss on the S&P. On
Thursday the S&P opened at 2168 and fell like a rock. Friday we ended the day at 2168. Therefore, the S&P recovered to exactly
where the market opened before the plunge. Guess where the 50 day moving average is –
2168.
Everything is broken:
-
Germany's
largest bank is truly insolvent yet the market rejoiced that it was not about
to go ‘bust’ just yet.
-
The FED (this
past week) paraded no fewer than 15 individuals spewing insanity about interest
rate hikes, and how they continue to be cautious of the ramifications.
-
Earnings Season
is about to start, and most feel that earnings are going to continue their year-over-year
downward slide (see chart).
-
The most recent revisions
for Gross Domestic Product (GDP) came in at a less than stellar 1.4% growth
rate for the first half of 2016 (see chart below). "This makes us very nervous for the third
quarter," said Paul Ashworth, chief U.S. economist at Capital Economics in
New York.
-
Oil bounced
because OPEC has supposedly agreed to limit oil production (starting in
November) to 32m barrels/day. The news
is coming from ‘sources’ – probably the same ones that floated that balloon in
the past. It remains to be seen if any
of these nations are really going to cut anything. I find it amusing lately how
rumors, sources and deals just happen to take place at times where the
fundamentals of the market stink, our FED looks to be beyond hope, and Hillary’s
approval ratings begin to fade.
-
And, the
election is continuing to drive people crazy.
Keep an eye on the levels.
-
For a rally to
break out we 1st need a close over 2168, then one over 2175, and
finally a close over 2180 to really think they're going to achieve the momentum
they need for another all-time high.
-
Until those
levels fall, we're still trapped in the sideways range.
-
On the downside,
if we ever lose 2140 again, we will immediately test 2120 (probably the same
day) and if 2120 doesn't hold – look out below.
Be careful out there because
all heck is breaking loose! Trade this
market, don't marry it. There is NO
fundamental reason for the market to rise other than more funny-money being
printed and injected into the system. And while that does make stocks rise or at
least hold on – it’s NOT a sound reason to buy.
And once we get past
election day – all bets are off. Next
stop on the upside is about 2180, but it’s never been as dangerous as it is
right now. Take care folks and be safe
out there.
TIPS:
One thing I’m watching is TSLA:
-
TSLA is in
a weekly squeeze to the ‘downside’, and after the early mutual fund cash comes
into the market on Monday and Tuesday, I plan on selling a Call Spread or shorting
TSLA.
-
I’m also nibbling on AG, AUY, CDE, FCX, FFMGF, FSM, HL,
NGD, PAAS, PGLC and SAND – knowing that they could have a little more downside until
moving higher.
To
follow me on Twitter.com and on StockTwits.com
to get my daily thoughts and trades – my handle is: taylorpamm.
Please
be safe out there!
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