Another Freaky Friday as stocks plunge in pre-holiday trade

Pundits thrash about on Fed, employment, China, oil and other tea leaves. But today’s thin trading finds investors bailing out before long holiday weekend.

Hamlet and Yorick.
"Alas, poor Yorick, why is the stock market looking more like you every day?" (Deleted line from "Hamlet." Painting by Delacroix, image via Wikipedia)

WASHINGTON, September 4, 2015 – Nothing much to report today, really, so we’ll keep things short. As we expected, Friday is turning out to be a decisively down day on Wall Street in predictably thin, pre-Labor Day holiday trading. The DJI is currently off an unpleasant 330 points at 2:30 p.m. EDT, and the other averages look equally sick.

So what’s the matter? China, oil, some other unknown terror?

TV’s talking heads are mostly blaming today’s crummy action on Friday’s employment numbers, which “unexpectedly” weren’t quite as good as expected, which they never are. That said, the pitiful new employment number, once again well below 200,000 as it so often is, caused the government’s largely phony U-3 unemployment figure—the one they market to the public—to drop to 5.1 percent, seemingly indicating a robust economy. It’s all a convenient lie, and has been for many years.

This economy is far from robust. Worse, the U-6 unemployment number for August—the real unemployment number that includes unemployed workers who’ve dropped off the unemployment compensation rolls, underemployed workers and part-time workers who want full time work—is still sitting much higher. It remains stubbornly above the 10 percent handle as it has for the better part of two years, before which it was even worse.

The August 2015 number sits at 10.3 percent, a far cry from the highly misleading 5.1 number being bandied about. You’d think it was the ’80s again. But under America’s current dictatorship, that’s hardly the case.

Speculation is that this allegedly wonderful unemployment number will encourage the Fed to announce it’s going to start jacking those interest rates up again in its September report. Those doing the speculating were the same ones that told us last week that because of the China Syndrome, the Fed wouldn’t raise rates at all in 2015.

In point of fact, all these “expert” commentators are blowing it out a certain orifice. What’s going to happen is this: the Fed is going to raise rates exactly when it pleases, which, of course, it doesn’t really know. They’re going to do it because they know they need to in order to achieve some semblance of normalcy in the banking environment. So why all the public dithering? These idiots are making Shakespeare’s Hamlet look positively decisive.

That said, the public at large is getting sick of the Fed’s cosseting of banks, bankers and other associated fat cats. The U-6 unemployment number bears out the public’s frustration. All the “recovery” since the market’s 2009 bottom has been planted in the vaults of major banks and in the bonus checks of America’s fat cats, not in the average American’s wallet. Problem: the average American knows this. Their wages never go up, but prices do, despite an “inflation rate” that never seems to move.

In reality, it’s all baloney and Washingtonspeak anyway, but the punditocracy needs something to say, so today they’re saying the Fed is going to raise interest rates and that’s why the market is going down.

The market is going down because nobody but the HFT machines are trading today and need to smack down yesterday’s rally to take the other side of the trade today. Back and forth, back and forth. The HFTs keep profiting, but those individual investors who are left, along with many mutual funds and hedge funds, are being whipsawed to death by action like today’s.

It’s best just to take off early today just like all the really rich people do. They’ve already bailed for the holiday weekend, lest they risk too many assets over the next three days when they can’t trade. Nothing much for the rest of us to do since the HFTs are assuring we can’t get a decent bid if we want to sell. So the heck with them. Let’s head for the beach or the mountains for this final American summer weekend.

We’ll be back Tuesday, after the holiday weekend is over.

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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