WASHINGTON – Wall Street for a negative close Tuesday at the 4 p.m. closing bell. Big Tech stocks resumed their losing ways, with a few big names hammered all day. Among them: Amazon.com (trading symbol: AMZN), Facebook (FB), Alphabet / Google (GOOGL), Apple (AAPL) and a host of the usual suspects. Notably, their CEOs face a grilling on Capitol Hill today. The Big Tech massacre remains a likely case of profit taking after tech’s recent run- up. But the market’s nervous tone indicates increasing anxiety over the economy.
Facing Mr Market today: The Fed
According to CNBC Wednesday morning, the Fed announcement and press conference may offer more of the same “forbearance” currently in place.
“The Fed will conclude its two-day policy meeting Wednesday and is set to release a statement at 2 p.m. ET. Chairman Jerome Powell will have a press conference at 2:30 p.m. ET.
“The central bank is expected to keep short-term interest rates unchanged at near zero to support the economy still struggling with the coronavirus pandemic. On Tuesday, the Fed announced it would extend its emergency lending programs through the remainder of 2020.”
… and maybe a hurricane?
Of course, there’s always something existential to worry about. As the media obsesses over the number of “coronavirus cases” in Florida, the Tylers of ZeroHedge alert us to a little weather issue that may soon engulf the Sunshine State.
“A weather disturbance is churning through the Atlantic Ocean that could strengthen into a tropical storm Wednesday, threatening South Florida by the weekend.
“The National Hurricane Center’s (NHC) 5:00ET advisory on Potential Tropical Cyclone 9 shows the disturbance was located about 385 miles east-southeast of San Juan, Puerto Rico, with winds of 45 mph and was moving west-northwest at 23 mph…
“The disturbance is expected to strengthen today as tropical storm warnings have been posted for Puerto Rico, Vieques, Culebra, the U.S. and the British Virgin Islands, Antigua, Barbuda, Montserrat, St. Kitts, Nevis, Anguilla, Guadeloupe, Martinique, St. Martin, St. Barthelemy, Saba, St. Eustatius, St. Maarten, and parts of the Dominican Republic and north coast of Haiti…”
The country never seems to get a break this year. Couldn’t have anything to do with the November elections, now, could it?
Also facing Mr Market: Big Tech testimony, featuring the Fools on the Hill
ZH is more helpful on today’s Big Tech hearings. They repost Scott Galloway’s entertaining observations, which contain a surprising tidbit of information we hadn’t been aware of.
“Big tech has won before the hearing starts. Agreeing to let all four testify concurrently inhibits the committee’s ability to go deep on any one issue, and will leave the American public with a sentiment instead of a viewpoint on big tech, much less any conclusions (such as, that the Obama DOJ was asleep at the switch, and Instagram and Whatsapp should be divested). The Covid-inspired remote format dramatically lessens the likelihood of an unscripted moment that reveals something the American public didn’t previously know. Fabric softener for tough questioning is the deep pockets that keep members in power.”
Wow. So this is a virtual grilling. That could seriously limit the usual theatrics. Nevertheless…
“When the show starts, Zuck will be the target of the most ire, as he’s an oligarch minus the charm. Bezos, on the other hand, will receive the least ire, as his command of soft power is second only to China.”
Prof. Galloway draws an amusing conclusion. It reminds us of yesterday’s stupid and useless grilling of AG Barr by US Rep. Nadless and other lefty buffoons on his committee.
“The effective panelists at these hearings use the witness as a prop to stamp their passport on the way to the destination (you’re a monopoly). The strategy is simple: ask a question, share screen/visual, unshare so public can see an awkward reaction by witness, allow 5 seconds max for answer, interrupt, and wash/rinse/repeat.”
As usual, bold text via ZH. Read the whole thing. This guy knows how to write.
Morning market update
Mr Market is now open for business as we write today’s entry, circa 10 a.m. ET. Stocks are modestly up. But they’ve been going sideways at best lately. In Wall Street-speak, perhaps they’re “digesting” their recent big up-moves. And perhaps they’re reconsidering, given the 24/7 coronavirus terror attacks being perpetrated on America and its economy by uniformly misleading reportage by the usual suspects.
When we enter a period of “digestion,” that investing pause, whether short or long, eventually breaks up or down depending on some as-yet unknown catalyst.
As a result, investors should remain cautious. We’ve been trimming a few positions here, but continue to hold most others. Our fear, as usual after the March crash, is that we could miss the next Big Bullish Ride if we dump too many positions. On the other hand, holding too many positions could damage our portfolios if, instead, we get a Big Bearish Ride.
Investing can be fun, but it’s also tough during nail-biting times like the ones we’re in now. My conviction that we’re heading for a V-shaped recovery has been tempered lately, with a U-shaped recovery now more likely.
But with one of America’s political parties willing to kill the economy and maybe more than a few Americans (the negative hydroxychloroquine hoax) to gain permanent party and perhaps one-party rule forever, the next few months are a cipher. So we continue to hold, perhaps foolishly, a small position in the double-bearish S&P 500 ETF, maliciously abbreviated “SDS.”
– Headline image: Cartoon by Branco. Reproduced with permission and by arrangement with Legal Insurrection.