Oil, the Fed and Donald Trump hit Tuesday Wall Street trade

Dazed and confused and fearing interest rate rises and populism, Wall Street continues to move away from investments in U.S. stocks. We continue to hedge.

Yo-yo collection.
Yo-yo market or Zombie Apocalypse? Take your pick. (PR image, Zombie yo-yo)

WASHINGTON, May 17, 2016 – We’re back to yo-yo market days this week, as Tuesday’s trading action seems to be following a familiar pattern—namely, negating any gains the averages may have made lately. As of 2 p.m. EDT, all three major averages, the Dow, the S&P 500 and the NASDAQ are down an average of 1 percent on the day. Oil is up again, flirting with the $50 mark for both Brent and WTI.

The current market wobbling is likely due to the usual suspects, oil and the Fed. The consensus on oil, for what it’s worth, seems to be that it won’t significantly top $50 per barrel at least in the near future. Then again, no one really knows, even though they happily claim to.

Regarding the Fed, interest rate worries are cropping up again. Inflation, according to some, is getting “robust.” But these clowns tend to annualize the last couple of months’ worth of figures, which is misleading. Further, given the current lack of wage pressures, the Maven simply doesn’t see this as a current threat.

Ironically, the Fed and the Eurozone would both absolutely love to see some actual inflation, given that the only current way out of today’s death-grip of international over-indebtedness is for countries to inflate their way out.

But, given that central bankers and politicians alike won’t let their controllers—the mega-rich—lose a single dime, they’ve weighted “stimulus” efforts for years in favor of wealthy investors and companies who use free central bank money to buy back shares of their own stock—swelling their own investment portfolios—rather than investing in research and development and paying their beleaguered labor force a tuppence an hour or so more.

If all this central bank largesse, or even a major portion of it, had found its way into the hands of the steadily shrinking middle class, it might have created the kind of demand that could have inflated things earlier and brought about a real recovery instead of (in the U.S. at least) a steady and likely permanent decline in living standards and international status, matching the real goal of the current despicable anti-American administration.

The Fed and the ECB are mired in this mess. They could start extricating everyone from it this afternoon. But to do so might cause some discomfort for their wealthy patrons, so it won’t happen. Any interest rate increases will be small and virtually insignificant. But the fear that the gravy train could be even close to ending for the 1%-ers adds a mega-dose of fear and loathing to the market tone.

Added to this, we think, is what we see as the market’s increasing fear that The Donald could very well be on track to be the next President of the U.S., no matter what the lapdog media currently proclaims about the superiority of Her Hillaryness. In the Maven’s opinion, Trump is not really a Republican at all, though he could be the face of the Republican future—one in which white, working-class and largely unemployed or underemployed men will finally get their just revenge against the idiots running the machine in Washington, D.C.

The very thought that real American voters might take control of their country again strikes fear into the hearts of robber barons and Socialist thieves alike. We are persuaded that we’re seeing some of this in the market as well.

Market pros, in general, would prefer Her Hillaryness, since she’s a fellow-exploiter and thief they feel comfortable with. The very thought that they might not get their wish, however, causes them to sell, fearing Armageddon in November. They might get it, too. But that’s better for the rest of us in the end. The current negative stasis is killing everyone, save for those wealthy members and toadies who occupy what the ZeroHedge folks like to call “the deep state.”

Trading Diary

What does that mean for us? It means we continue to be wary of this market, that’s what.

We’ve added tiny increments to our holdings in Swiss gold and silver bullion ETFs SGOL and SIVR. We’re looking for opportunities to get another plunge in the Allergan Preferred shares AGN/PRA so we can pick more up. We are holding and looking (on positive days) to pick up more shares of the S&P 500 2x short ETF SDS. And we’re sneaking back into some shares of Teekay Tankers (TNK), a risky move that may or may not pay off when they report earnings on Thursday.

We continue to hold our substantial slate of preferred and term-preferred stocks, even though they’ve been weakening slightly for the last several days due to that aforementioned fear of even a tiny rate hike. (These stocks move in the opposite direction from interest rates.)

We are acquiring, share by share, a position in the thinly Guggenheim equal-weight consumer staples ETF whose symbol is RHS, given that this is an ETF for which our brokerage charges no commission. And we’re looking to nibble at transports, which were hit again today, particularly Southwest Air (LUV). The big U.S. airlines are dealing with that Federal price-fixing investigation—something that makes investors nervous. But thus far, travel is robust and the summer season looks promising for most of the airlines, all things considered.

We also did a small copycat trade this morning, following Buffett’s boys by buying a bit of Apple (AAPL), whose decline, we also think, has reached the silly stage. (We also upgraded our iPhones this weekend to help out the cause.) If either Buffett or the Maven were a bit too early to the coming Apple party, we’ll likely average down a bit. This kind of play, like the Allergan Preferred A play, requires a bit of patience, something that’s in short supply for everyone in these waning days of the worst Administration in U.S. history.

Only 248 days to go, BTW, according to our Obama countdown calendar. Inauguration Day 2017 to us is like Christmas is to a little kid: we can’t wait. Unless, of course, the Dems steal the election win again, which will likely mean the end of life (and investing) as we know it.

See you tomorrow.

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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