WASHINGTON, July 25, 2016 – Halfway through 2016, we’re getting to the point where domestic and international politics plus reality on the ground are all itching to gang tackle and crush Wall Street’s surprising summer rally. Market averages have been hovering in the red zone nearly all of Monday, and at 2:30 p.m. EDT, the three major averages are off roughly 0.5 percent, with stocks taking a modest hit across the boards. Corporate earnings fears and the slowly deflating price of crude oil after its substantial rally are said to be the prime culprits.
It’s been telling that since some time last week, the Maven’s beloved defensive portfolio of preferreds has been getting nicked a tiny bit each and every day. That either means that the Big Boyz are getting out of stocks like these to take more of a high-beta gamble, or they’re getting out of markets en masse fearing that between not-so-good corporate earnings reports this week and the weird denouement the Democrats are going to experience after Thursday’s convention close will mark the beginning of a major summer stock swoon.
Speaking of the Democrats, it seems they’ve already adopted one of the Trump campaign’s chief planks. They’re building a wall, right now, to keep the riff-raff out… of their convention, that is, according to bb4sp:
To the Democratic National Committee elites, keeping average Americans away from their convention is a good idea, while protecting the southern border from intruding terrorists, rapists and murderers is a bad one.
The DNC has erected a four-mile fence around its convention site at Philadelphia’s Wells Fargo Center. (Isn’t it ironic they’re doing so much to protect a site named after a bank?)
The fence, which appears to be about 8 feet tall, is intended to keep out any individuals with whom Democratic Party leaders, delegates and other liberal elites would rather not mingle.
Good observation, largely unobserved by the MSM. But back to stocks.
We follow charts and fundamentals here, but all the usually reliable indicators have been completely gummed up by clear evidence of major central bank support for the bull market in stocks—at all costs. Problem is, you can only print so much currency to support this for so long before the system breaks. This, added to a rapidly sinking confidence that Soros and an international cadre of left-wing oligarchs can maintain their death grip on average citizens, is making many professionals very nervous indeed.
For this reason, unless something really big comes up, our comments will be brief this week.
Of course, something really big has come up—Verizon’s announced purchase of key assets from Yahoo! (symbol: YHOO). We’ll have more to say on this in our companion column, as soon as we can figure out what to say. But it will probably have something to do with two dumb blondes and an auto, energy and outer space “genius” whose brilliance only exists on the back of American taxpayers who are losing their derrières on his money-losing ventures.
We obviously didn’t get any shares of Dutch drug manufacturing IPO Patheon (PTHN) last week, as we indicated in Friday’s column. The rich guys got ‘em all, and are happily flipping PTHN shares in today’s negative market. The IPO was priced at $21 per share and the stock is now trading in the $25 neighborhood, down a bit from Friday’s close. That’s still a good 19-20 percent profit for the rich guys who flip those shares today. Not bad for less than 48 business hours of work. Good to see that the rich are still getting richer. At least someone is.
On other fronts, we may (or may not) dribble a few more shares into sector ETFs we own, particularly Schwab’s REIT ETF, SCHH. As we’ve noted earlier, the REIT sector will separate out from the financials as their own separate sector in the S&P 500 averages and elsewhere, which will force buys and sells in this area when it happens in mid-September.
We do love to buy stocks on a down day like today. But we’re still maintaining a cash cushion against disaster and are unwilling to use that cash here, since markets look like they’ve started cruisin’ for a bruisin’.
Otherwise, we’re going to twiddle our thumbs. But we’ll also be ready at a moment’s notice, to start hedging our portfolios with a helping heaping of the double-short S&P 500 ETF, aka SDS. Love that symbol. Sort of links 2016 with 1968, don’t you think?
See you tomorrow.
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