FOMC report hits with a thud, and so do Wednesday markets

FOMC report hits with a thud, and so do Wednesday markets

Europe goes after Apple, “Sell in May” syndrome picks up the pace, and overbought biotechs continue what could be a violent correction.

Caricature of Janet Yellen.
Caricature of Fed Chair Janet Yellen. (

WASHINGTON, April 29, 2015 – As we predicted yesterday, Wednesday’s trading was unpredictable and weird leading up to the Federal Reserve Open Market Committee’s (FOMC’s) 2 p.m. meeting transcript release. The problem is, trading remained weird even after the report was made public, likely due to the fact that all the insiders who got the scoop early (as they always do) were still trading away, mostly on the sell side, it would appear.

The bellwether Dow Jones Industrials (DJIA) was down as much as 150 points Wednesday morning, recovering to a negative 74+ points by Wall Street’s 4 p.m. closing bell. The S&P 500 and the NASDAQ didn’t do too well either, with the S&P hit again by another serious downdraft in the way-overpriced biotech sector.

Meanwhile, the NAZZ was riled by word that the Europeans were going to pile onto Apple (AAPL) the way they’re currently piling onto Google (GOOG), allegedly for real or imagined profits at the expense of the currently unaffordable European welfare state.

Those plucky Europeans are likely taking a page out of the popular U.S. socialist playbook. Unable to jack up taxes any higher without getting lynched, Europe’s elitist politicians-for-life, like those in this country, are inventing other things they can call by other names but that, in reality, are really just another variety of confiscatory corporate tax.

Like those permanent U.S. tax levies on tobacco companies, a never-ending spigot of money siphoned from corporate profits of those companies, sold to the public as providing needed health and education funding but confiscated by Goldman Sachs and most state legislatures years ago to fund… whatever. Mainly because these profligate governments were afraid to raise individual taxes any higher.

So now it looks like Europe wants to do the same thing to those pesky and highly profitable American tech giants, just the way they smacked Microsoft (MSFT) around roughly a decade ago. What a greedy, useless spectacle. The bottom line is: if you or your company happen to have any money lying around that your government thinks is “surplus,” they’ll soon be looking for a way to make you or your company hand it over to the politicians in power so they can keep “fighting for you” by funding their next re-election.

BTW, Apple’s stock, down again today, also wasn’t helped by reports that the Apple Watch was in short supply due to defects in a couple of key parts that have slowed or halted production. Some weeks even Tim Cook can’t catch a break.

The Fed itself, after noting that first quarter gross domestic product (GDP) numbers were even worse (+ 0.2 percent) than the previously guessed at numbers, blamed it on the “weather” (an always fun game to explain away each year’s weak first quarter) and didn’t say anything threatening.

As one wag we often read aptly noted, “as always, there are at least 5 excuses (for bad growth numbers)—one of these days the reason will be simply that the economy is generally just pretty lousy (at least for the ‘have nots’).” Amen to that, brother. Except that for this government, that will be a cold day in hell, which itself will never happen because of global warming climate change–the same thing that, apparently was also behind the recent massive earthquake in Nepal.

But again, we digress…

The Maven thinks we are at the unofficial start of “Sell in May” season, which involves throwing out pretty much everything in your portfolio because everyone else is. While a short rally could erupt at any time, we think the market will continue to move in the general direction of weakness. That’s why we figure there’s no point in scheduling any trading moves for tomorrow.

An additional problem—the dollar has begun to weaken again against the euro, no doubt because insiders already knew the Fed was going to get into stall mode when it came to actually making a decision on when to raise those interest rates and by how much.

The very thought that the Fed might actually make a stab at a return to interest rate normalcy was what lopped about 40 cents off the dollar-euro pairing over the last year or so. Now that the fun has been postponed, feisty currency traders are going to have fun dumping dollars and buying euros until the next interest raise scare occurs—with even betting now on either September or (Merry Christmas) December.

At any rate, the euro was up to about $1.11 today, the highest it’s been in dollar terms in many weeks. We’ll see how this one turns out.

In other news, we are in for shares of a very iffy biotech IPO this evening, and may or may not pick it up when it’s priced. But judging from the way biotechs are getting hammered back to earth lately, this would have to be a very fine offer for us to actually execute a purchase.

We’ll see. Pricing should happen later this evening. We’ll let you know what we did and why. And we’ll be back at some point during tomorrow’s trading, assuming we can spot a trend, any trend, besides the obvious evidence that the usual suspects are boarding that “Sell in May” express train a little early.

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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