Oil in trouble, stocks lack direction in Monday trading

Oil in trouble, stocks lack direction in Monday trading

Puck cartoon, 1906.
Puck magazine cartoon, May 23, 1906. U.S. President Teddy Roosevelt grabs head of Senator Nelson Aldrich, a relative by marriage of Standard Oil’s John D. Rockefeller, depicted as a snake here. (Via Wikipedia)

WASHINGTON, October 27, 2014 – Monday’s trading is dominated by a seemingly endless number of competing traders, ideas, politics and general foolishness.

Traders are busy talking their books on CNBC as usual. Politicians and economists paint rosy or rotten portraits of U.S. business prospects as we run up to a momentous Midterm Election 2016 where Republicans should dominate but still run a better than even chance that their anti-Tea Party idiocy will cost them the Senate by about one seat. And the world at large plays a dangerous game with the price of oil as hot spots and resentments continue to grab headlines around the world.

What’s a trader to do? We nibbled into two oil stocks late last week and added to our positions this morning when the price-per-barrel of West Texas Crude dropped briefly below an astounding $80—unthinkable as late as August.

Back in the day, Teddy Roosevelt was famous for turning his trust-busting energies on Standard Oil for its monopoly practices, price-setting and price-gouging. Today, things seem to be just the opposite as so many people around the world (and particularly in the U.S.) are drilling for and finding oil that competition in the oil patch holds a 50-50 chance of taking oil down below the price where it’s profitable to keep drilling.

There’s politics involved in this one as well, but we’ll leave things be right now. Mutual funds are making final tweaks to make their portfolios look like towering edifices to economic genius. And meanwhile, stock prices continue to inflate as companies across the U.S. continue to use what’s left of the Fed’s free QE money not to invest in R&D but to buyback shares, inflating earnings per share and fattening the wallets of all top corporate execs compensated in part by accruing stock options.

Another reason for caution: next Tuesday’s midterm elections. They could still go either way in the U.S. Senate and in some governorships. Things tend to make little sense in some parts of the political environment, particularly in the case of Kansas Governor Brownback. He seems likely to lose since even his fellow Republicans—addicted like nearly all politicians to buying votes with your money—hate the governor’s guts for his big tax cuts.

So why are Kansas voters likely to oust him? Beats the hell out of the Maven, except for the usual amped-up anti-conservative crap the newspapers have been putting out for the voters to lap up. They’re lapping, and that’s the way politics is these days.

Which means that even if the good guys win next week, the over all results may not be what optimists expect.

It’s all too screwy for the terminally cynical Maven. So aside from his currently unproductive trades in the oil patch—specifically Hess (HES) and Anadarko (APC)—he’s sitting tight for now and has parked a bunch of cash in a low volatility very-short-term Treasury ETF (Schwab’s SCHO) to wait out the rest of this month’s nonsense.

Makes you long for a return to those good old days of buy-and-hold.

We need a vacation.

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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