Saudis, OPEC supposedly agree to November oil production cut. Iran, as always, will be the wild card. Janet Yellen tries—feebly—to counter criticism from Donald Trump.
WASHINGTON, September 28, 2016 – Another fairly short column today as the Maven is still fighting an inner ear infection with antibiotic prescriptions that cost a lot of money. That’s likely because he’s old and neither Medicare nor wraparound insurance wants to pay too much for leading edge drugs, since Medicare money is being quietly peeled off by the Administration to support the Death Spiral of Obamacare. (Unbeknown to most old people, BTW. It’s something AARP never bothered to tell them.)
Like the Maven, the stock market keeps trying to recover, too. Buoyed by a sharp morning snapback in the price of crude oil, the market slipped back as those crude prices begin to retreat; that is, until news hit the tape that OPEC voted to reduce oil output beginning in November. Right. We’re sure Iran, among others, will faithfully abide by such an agreement. But at least today, it’s good for a rally.
Meanwhile, Bingo! Oil’s back up near the Wall Street close, up as much as 5 percent and change before pulling back a bit.
More Fed blather on the Hill today, as Fed Chair Janet Yellen presented the central bank’s annual report. According to CNBC,
“The Federal Reserve does not have a ‘fixed timetable’ for removing the current accommodative stance, central bank Chair Janet Yellen told Congress on Wednesday.”
Yellen also attempted a feeble answer to Donald Trump’s repeated charge that the Fed is totally politicized. Again, CNBC:
“Yellen… did offer up a fairly spirited defense of the Fed’s independence during her quarterly news conference Sept. 21.
“‘I can say emphatically that partisan politics plays no role in our decisions about the appropriate stance of monetary policy,’ Yellen said in response to a question about Trump’s attacks. ‘We are trying to decide what the best policy is to foster price stability and maximum employment and to manage the variety of risks that we see as affecting the outlook. We do not discuss politics at our meetings and we do not take politics into account in our decisions.’
But not everyone is buying Yellen’s argument or ignoring the validity of Trump’s criticism (as CNBC usually does).
“Fed historian Allan Meltzer at Carnegie Mellon countered that the Fed indeed has been political by helping underwrite trillions in U.S. government debt.
“‘The Fed always has been a political agency. If you’re in Washington, you’re a political agency. But this Fed has been totally politicized,’ Meltzer said in a phone interview. The central bank’s low interest rates take ‘all the pressure off the administration to do something about its deficits.’
“‘It’s quite appropriate that (Trump) says, yes, need to do something about the Fed, we need to depoliticize the Fed,’ he added.”
That’s a remarkable statement from an academic, not only for its clarity but also for its simple, unvarnished truthfulness. The state-controlled media will surely send this one down the memory hole quickly.
Theoretically, the Fed is supposed to be above politics, and, in the past, it often was. Today, as Meltzer correctly notes, the Fed, like everything else Washington touches, is completely politicized, having become just another cog in Washington’s left leaning, Democrat-controlled bureaucratic machinery. It’s the Matrix reloaded.
Yellen has been holding off on interest rate increases largely to help out Clinton’s candidacy. But in bobbing and weaving on the issue, she has diminished the reputation and the alleged impartiality of the Fed to the point where no one really believes what she says anymore.
We’ve been preaching here for years that at least while Ben Bernanke ran the Fed, he attempted again and again to get both Congress and the Executive Branch to team with the central bank to re-invigorate the national economy. Controlled by socialists who still can’t count, however, both these branches of government took a pass, bringing us to the miserable situation we yet endure in 2016: a permanently lame economy financed by ever-spiraling debt that simply cannot be repaid. Ever.
So there you have it. Trump, in his own blustering way has once again told the truth, for which the dishonest media has seen fit to lambaste him again. The elite establishment simply won’t give up its perks. Maybe that’s why those deplorable bitter clingers have no intention of giving up their guns. Ya think? Where does the madness stop?
Nothing really to report today. With unpredictable yo-yo market action continuing, and with the Fed having lost nearly all its credibility, this is a market without an anchor and without direction.
We’ve established small positions in the tech sector with Apple (AAPL) and in Guggenheim equal-weight tech sector ETF RYT. But otherwise, we’re holding steady with our somewhat too-heavy income-oriented portfolio even as we contemplate selling a couple of those outrageously high-yielding positions fearing a snapback if the Fed actually does raise rates in December, which we think it will, just because.
But that’s about it. Wish we could tell you more. But perhaps tomorrow, or sometime in 2017, we’ll get enough clarity to make some major portfolio shuffles.
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