Federal Reserve, free trade, Grexit fears hit Monday stocks

Federal Reserve, free trade, Grexit fears hit Monday stocks

Monday markets are haunted again by nameless fears with names. We won’t get a clearer trading picture until Wednesday afternoon when the Fed Oracle speaks.

Free Trade, Branco cartoon.
Does this one sound familiar? Free trade, Greece, Fed plague Monday markets. (Cartoon by Branco, see NetRightDaily link beneath article below*)

WASHINGTON, June 15, 2015 – It looks like we’re back to Blue Mondays on Wall Street these days. U.S. stocks were hit hard at the opening Monday morning.

The morning damage was virtually across the boards, with selling spurred by uncertainty surrounding the Trans Pacific free trade legislation, increasing prospects for an unpleasant “Grexit” finale to the Eurozone’s never-ending Greek problem and the overwhelming fear of impending rate hike news coming out of Wednesday’s Federal Reserve musings.

The latter fear would appear to be greatly exaggerated at this point, as bonds seem to have been in recovery mode since late last week—possibly an indication that things have gotten a little oversold in the debt markets. But no matter. When the HFTs and the algos decide to hit that sell button, it’s Katie Bar the Door time.

The Greek thing is what it is. But the ability of various Greek governments and the eurozone to kick the can down the road is beginning to make that whole scenario look a whole lot like Bill Murray’s timeline in “Groundhog Day.”

As for that Trans Pacific (TPP) package… Free trade is generally good for business. But even free traders like the Maven just don’t like all that secret crap that’s sitting in a basement office on Capitol Hill. We’ve already had one disaster from Obamacare, which the Democrats passed to see what was in it. Why pull this farcical secret nonsense on the public again? You’d think the politicians and oligarchs were running this country, right? Well, yeah, right.

Don’t get the Maven started.

As of 1 p.m. EDT Monday, the Dow Jones Industrials (DJI), which had been off well over 150 points, had recovered somewhat, down under 100 points. But as of 1:30 p.m. as we write this, the DJI is moving in reverse once again, down over 115. The broader based S&P 500 is off about 10 and the NASDAQ has been hit fairly hard, currently down nearly 26.

In short, if you’re long anything, you’re not a happy camper this afternoon.

Our reports will be on the short side today, tomorrow and Wednesday morning, given that this nonsense is likely to persist, at least until the Fed reveals its current non-committal, murky thoughts. That usually happens around 2 p.m. on Fed Wednesdays.

Until then, uncertainty looms large, meaning thin trading that gyrates at the mercy of headlines and rumors, courtesy of those headline- and rumor-driven HFT morons. That makes any kind of trade treacherous for us little guys, so it’s best to stay out of the way of the trading machines, which tend to react to nearly everything like the Incredible Hulk when he’s particularly freaked out.

No trading tips today. But if you’re in one of the short S&P 500 ETFs—SH (regular short S&P) or SDS (double-short S&P), you might consider putting some more on if we don’t see some happy talk soon. But also be prepared to reduce these positions Wednesday afternoon if the Fed says something nice.

* Cartoon by Branco, originally appearing on NetRightDaily, linked here.

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Terry Ponick
Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17