Cleveland celebrates first major league sports title since 1964, leading to Monday stock market rally. Or is Brexit sentiment change behind this bull charge?
WASHINGTON, June 20, 2016 – Sunday night in Oakland, the Cleveland Cavaliers won their first-ever NBA Championship in dramatic fashion, overcoming a 3-1 series deficit with a dramatic Game 7 win over the powerful Golden State Warriors. Into the early morning hours, thousands of delirious Cleveland fans celebrated the triumph of hometown hero LeBron James and his psyched up Cavalier teammates in an event that marked the city’s first major league sports title since 1964 when the great Jimmy Brown and the Cleveland Browns copped the old NFL title.
Celebrating the Cavs’ huge victory in the best way possible, Wall Street bulls ignited a huge Monday stock market rally right from the opening bell. As of 11 a.m. EDT, the Dow is up 248 points to stand at 17,922.50, a gain of 1.4 percent. The broader-based S&P 500 is up 25.61 to stand at 2,096.87 (+1.25 percent), and the tech- and biotech-heavy NASDAQ is up 76.82 to stand at 4877.13, a gain of 1.6 percent.
Markets were betting heavily on Brexit chaos this week leading up to the June 23 popular vote on Britain’s continued EU membership. Voter sentiment seemed to swing decisively in favor of the Brexit; that is, until the brutal, tragic assassination of pro-Remain MP Jo Cox by an apparently deranged Brexit supporter.
After holding steady in favor of the Brexit, polls suddenly shifted direction over the weekend, perhaps in belated sympathy for the young family of the late MP. Whatever the case, U.S. stocks are celebrating the move today. As of Sunday, however, London’s famous bookmakers were still offering opposing Brexit odds.
As a result, markets are likely to remain hugely volatile this week until the vote is concluded and the results tallied. A pro-Remain vote would more or less mean EU business as usual, a comforting thought for those who “remain” long the market. An actual pro-Brexit vote might have meant chaos throughout the world financial system along with a monstrous bear-move in stocks.
Of course, nobody knows what really might have happened should the Brexit have passed. And more to the point, nobody will really know a thing until the final vote count is complete, given the recent unreliability of UK political polling. So as rumors and polls bounce about for most of this week, we expect a tremendously wild and choppy ride, and don’t intend to make major bullish or bearish moves until the dust has settled.
Meanwhile, Go Cavs! Cleveland’s hometown heroes will return for what promises to be a huge and hopefully joyous victory parade through downtown Cleveland this Wednesday.
On a political note, this will likely provide some real-time crowd control experience for Cleveland’s police force prior to the upcoming, perhaps less celebratory demonstrations that are already being set in motion to disrupt next month’s Republican National Convention here.
In 2016’s spirit of equal opportunity, hostile demonstrations are also being planned to greet Democrat conventioneers in Philadelphia a bit later this summer. How law enforcement officials handle both events could provide a very different backdrop for stocks as the summer progresses towards this November’s political showdown.
After last week’s lousy trading results, we’re happy to enjoy today’s nifty respite and may use it to retire a couple profitable positions. However, we retain our modest hedge in SDS, the double-short S&P 500 ETF. Despite today’s Wall Street happiness, things can turn on a proverbial dime this summer, given the markets’ increased volatility, and it’s hard right now to establish long term positions with any degree of confidence.
We remain somewhat nervously over-invested in a variety of mostly term-preferred stocks as a way to get something resembling a stable return during times when nearly every bet, whether long or short, seems to turn out rather badly.
Silver seems to be a happier hedge than gold these days, although we’re modestly invested in both via ETFs. But these classic hedges against fiscal disaster have also been slippery lately, so caution and nimble trading are the watchwords until we can get an all-clear signal from somewhere.
Have a good Monday.Click here for reuse options!
Copyright 2016 Communities Digital News
This article is the copyrighted property of the writer and Communities Digital News, LLC. Written permission must be obtained before reprint in online or print media. REPRINTING CONTENT WITHOUT PERMISSION AND/OR PAYMENT IS THEFT AND PUNISHABLE BY LAW.
Correspondingly, Communities Digital News, LLC uses its best efforts to operate in accordance with the Fair Use Doctrine under US Copyright Law and always tries to provide proper attribution. If you have reason to believe that any written material or image has been innocently infringed, please bring it to the immediate attention of CDN via the e-mail address or phone number listed on the Contact page so that it can be resolved expeditiously.