Biden ineptitude, Covid nonsense, retail sales continue to hit US stocks
WASHINGTON – Stocks looked toppy as US markets closed last Friday. Monday’s action didn’t look very promising either with most sectors beginning to look a little pale around the edges. But Tuesday’s ongoing swan dive looked even scarier for 2021’s perma-bulls. Working against stocks: Biden ineptitude, ongoing Covid nonsense, poor July retail sales numbers and continuing fears of Fed “tightening.”
Regular readers know that this column regards the current Biden Junta in Washington as a continuous beacon warning of political, national and international disaster. By now, the entire world, save for Bernie, AOC &Co., the PelosiCrats, the (fast-vanishing) Lincoln Brigade turncoats and perverts and a few of the dumbest RINOs, is laughing at the last-remaining (former) superpower’s lack of a functional CEO. Meaning that things have continued to fall apart both domestically and internationally at an increasingly rapid pace.
The patented Biden ineptitude came to its latest head this past weekend as our effectively abdicated Commander-in-Chief napped away up in Camp David while 20 years’ worth of taxpayer-funded military sacrifice went up in smoke in the Superpower cesspit known as Afghanistan. That massive market confidence-breaker continues to undermine US and international stocks alike.
Oops… it’s no longer a brave new world
The now almost legendary Biden ineptitude has taken incompetence to an entirely new and existential level. To mangle a line from Yeats, the once US-led international political center “cannot hold.” Because it’s gone.
We’re at a major branching point in political and economic history. No one knows the next move. Mr Market hates uncertainty. And now uncertainty is pretty much what we’ve got. Look out below. As those reliable cynics of ZeroHedge – the Twin Tylers – duly note.
A new, American-made Confederacy of Dunces
“A day that was already the worst in Biden long political career, just got worse when moments ago Reuters reported that just days after the US president showed just how dependent on foreign oil the formerly energy independent US has become, when on Aug 11 he begged OPEC+ to pump more in order to lower the price of gas at the pump, OPEC+ responded that it sees no need to release more oil into the market at present, despite US calls. As a reminder, OPEC+ is currently planning to raise output by 400k BPD a month beginning in August until all the current reductions of 5.8mln BPD are removed, and will not accelerate its schedule despite Biden’s pleading.
“In response oil, which had tumbled today after the latest dismal Chinese economic data, managed to modest rebound as OPEC+ clearly refuses to cooperate with the Biden admin.”
About that Covid nonsense
Despite the never-ending public commentaries on the Covid nonsense put out by the Lamestream Media and their bosses in the Biden Dunciad and including the CDC, the latest “Delta variant” strain appears to be peaking, even as the administration continues to allow thousands of illegals infected with the newest varian (Lambda) to infiltrate the US Southern border.
And without the need for vaccination as they’re bused or flown, at taxpayer expense, to Red Congressional districts across the country to infect their legal residents, allowing the propagandists to jeer at “unvaccinated” Red State Trumpsters and Libertarians.
We’ll address the Covid nonsense in a separate piece. But suffice it to say here that the never-ending and largely untrue Covid miasma is taking a toll on stocks and bonds, even as other demoralizing activities continue to undermine markets elsewhere.
Illogic and phony dialectic is the order of the day
ZH remains one of the few sites (aside from CDN) that continues to harp upon the wildly hilarious Biden ineptitude with regard to US energy non-policy.
By (illegally) terminating Alaskan oil leases the previous administration had okayed and (illegally) terminating the already approved Keystone XL pipeline while also moving to cancel the ability to frack and drill on government-controlled properties, the current excuse for an administration took us back to the Obama Era.
Which means starving the country of the cheaper, domestically produced fossil fuel it needs in order to raise prices through scarcity.
And which also means going back to the future by making the average American once again a hostage of the price-setting OPEC+ cartel, weakening the purchasing power of the dollar while at the same time allowing foreign governments to once again manipulate US national policy via fossil fuel price extortion.
Pricing Joe Sixpack out of fossil fuels and into dysfunctional electric vehicles that aren’t ready for prime time
Why repeat that headline. The Obama strategery was always to make the price of fossil fuels so high for the lower and middle classes that they’d be forced to buy fancy, over-featured and still not-ready-for-prime-time automobiles that cost too much, deliver too little, but still enrich all the elites and political functionaries who’ve already deeply invested themselves in electric car startups (with the help of taxpayer funding), battery startups and manufacturers.
And likely, custom chip-makers who’ll be secretly slipping sensors and monitoring devices into these cars without announcement. Sensors and devices that will later be used by the government to control the ability of the average American to travel at will.
That’s another topic.
The near-instantaneous death of the Trump America-First Prosperity
But the upshot is that America is back to the America-last world of Barack Hussein Obama. The Trump prosperity was killed off, permanently, in less than 6 months. Which shows you, how vulnerable stocks and democracies become when self-appointed totalitarians gain control.
Stocks don’t like this kind of totalitarianism either. And belatedly, they’re beginning to see what’s going on. Investors can see how small companies – those not in on the game – may fare in coming months and years.
Finally, there’s the Fed
Let’s see. We addressed the effects of Biden ineptitude. We covered the Covid nonsense elsewhere and addressed those iffy July retail sales numbers. And we demonstrated their effect on Mr Market as evidence for Tuesday’s continuing massive stock market decline. How about the second day in a row of rumors that the Fed plans to cut back its bond-buying frenzy. Will they put this into place in September?
Well, maybe they will actually do that at some point. Hopefully, before giving in entirely to the Modern Monetary Theory currently championed by noted economist AOC. Who may soon look to replace Chairman Powell as Fed chair as soon as his term expires. (Shudder.)
About those interest rates
But Innovative Income Investor offers another take on this in a Monday commentary.
“Interest rates (as represented by the 10 year treasury) climbed over the close the previous Friday by 1 basis point. Rates were 8 basis points higher until Friday and then yields tumbled by 7 basis points. For most of the last 10 days inflation expectations had been climbing, but drastically lower consumer sentiment (lowest reading since 2011) seemed to have put a halt to higher rates–for now. Of course no one knows for certain what caused the rates to move lower Friday–but we all have to speculate.
“The Federal Reserve balance sheet grew by a modest $22 billion last week to a new record high–we will be able to say ‘to a new record high’ for at least the next 2-3 years. With congress spending like crazy there is no chance that the Fed will be able to back completely out of being active in the treasury market anytime soon–and maybe no time in the next decade.”
That last sentence may involve a bit of hyperbole. But the way things have been going, it’s time to remain cautious. Sellers hammered our fairly fully-invested portfolios again today. But we continue to (mostly) hang in there. For now.
—Headline image link: Image by Garrison, reproduced with permission and by arrangement with Grrrgraphics.com.