Having bet the ranch earlier this summer on a Clinton presidential landslide, bulls become bears after Wikileaks, FBI revelations. Most stock sectors tank.
WASHINGTON, November 1, 2016 – The relentless Election 2016 pain continued for traders and investors Tuesday as Wall Street laid another in a succession of eggs. The Dow, the S&P 500 and the NASDAQ were all off half a percent or more and there were few places to hide except cash and, interestingly, the Second Coming of gold and silver, at least in terms of ETFs.
What’s the deal? Corporate profits have actually been fairly decent during the current Q3 earnings season. While all’s not quite right with the world, we haven’t been witnessing too many mass-layoffs this year. And China and the Philippines’ current whack job government haven’t signed a non-aggression pact. (Yet.) What could go wrong?
What could go wrong, at least as far as Wall Street is concerned, is that The Donald—flat-out guaranteed to be the victim of an electoral massacre of historic proportions on November 8—might actually win this year’s presidential sweepstakes.
This past weekend’s FBI-Weinergate affair, which caused the formerly lauded FBI Director James Comey to re-open the closed Hillarygate illegal email case and, well, Hillary’s January 2017 Coronation is no longer a slam dunk. Which has got Wall Street in a mighty snit. They want Hillary to win because, like Obama—media reports to the contrary—she’ll keep their special moneymaking privileges intact. So to hell with those Deplorables who remain in their Flyover Country burrows like termites infesting a dead log.
Except that, at least for now, the final triumph of George Soros and his globalist 1% pals is no longer assured.
So, for investors and stock traders, the erosion in their holdings this week due to this chilling possibility has been wiping out billions of dollars in investment value as anyone in stocks or bonds seems to be bailing out of pretty much everything and the hell with the cost.
Electoral uncertainty has become so pronounced, it’s entirely possible we’ve seen the front end of the always predictable tax-loss selling season get started way early this year. Stocks of all kinds, in all sectors, are being thrown overboard without another thought, the kind of mass selling that will eventually lead to ridiculous bargains.
The mass dumping has been aided and abetted by that other looming, election-obscured cosmic fear: the probability that the U.S. Federal Reserve might raise interest rates, and soon. The Fed’s upcoming info release could contain that dreaded announcement.
On the other hand, such an announcement will almost certainly not be made before next week’s votes—illegal and otherwise—are counted, lest an interest rate hike further damage Hillary’s already declining electoral prospects. So that specter is likely to remain in haunting-mode until the Fed’s next info-fest in December.
With so much uncertainty, gold and silver have caught a bid again as traditional stores of value. But everything else is still under great selling pressure—a pressure that could get even worse next week if Donald Trump is proclaimed the clear winner. Wall Street hates Trump’s guts, and should he win, or get close enough to contest Democrat wins via the illegal votes routinely harvested in America’s largest cities, the pain could get considerably worse on the morning of November 9. Stay tuned.
Not much today. Our Allergan Preferred A (AGN/PRA) continues to get hosed solely due to its connection to the currently-hated pharmaceutical and healthcare sectors. That kills our portfolio percentages, at least for Q3. But in fact, very few stocks ended up in the green today. In our portfolios, only the double short S&P 500 ETF, SDS, and, almost inexplicably, shares of refining giant Valero (VLO) ended up in positive territory.
We did dump shares of our recent IPO purchase, Nutanix (NTNX) after our semi-mandatory holding period ran out. We were half inclined to hold onto these shares, but the pre-election selling has been relentless. After opening up nicely, NTNX began once again its daily journey to the downside, so we finally dumped our shares. Our 54 percent profit on this one was one of few bright spots we’ve experienced over the last few weeks, and we’ll take it. But we’re still irritated that because of the holding period, we didn’t get the close to 200 percent profit that the wealthy IPO flippers got to take on the day of the issue. But what can you do?
We did put in for shares of another IPO, this one decidedly non-tech. Smart Sand (proposed symbol: SND) is pretty much what it says it is. The company mines and sells sand, but of a special kind: fracking sand.
Based in Wisconsin where its mines are located, similar to competitor, Hi-Crush Partners, LP (HCLP), the company hopes to liquidate its current debt and get ready to mine even more of their sand, anticipating a pickup in U.S. fracking activity in 2017. We’re not sure we share their optimism, and may take a pass on this one, depending on how it’s priced.
Another day-to-day problem: what are the underwriters, headlined by Credit Suisse and Goldman Sachs, thinking by bringing this issue public in such a lousy market environment. With oil prices backing off this week and stocks selling off en masse for no reason at all (save the election), why not wait on this one? Alas, we’ll never get an answer to this question, so we await pricing to see whether we dare jump in at such a political juncture.
More tomorrow. It will mostly be politics again. But it’s politics and world news that are driving this market now. Decent earnings, low PE ratios, fat dividends, stock buybacks, positive chart patterns—none of these seem to matter any more. Perhaps some time next week, we’ll finally get back to some semblance of investing normalcy.
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