Catalonian secession vote, biotechs body slam Monday markets

August pending home sales slump doesn’t help either as stocks, junk bonds continue relentless downward spiral, Fed credibility declines.

Blue and red Catalonian flags. (Image via Wikipedia)

WASHINGTON, Sept. 28, 2015 – The Associated Press Sunday reported, “Pro-secession parties pushing for Spain’s northeastern Catalonia region to break away and form a new Mediterranean nation won a landmark vote Sunday by capturing a regional parliamentary majority, setting up a possible showdown over independence with the central government in Madrid.

“With 99 percent of the vote counted,” according to AP, “the ‘Together for Yes’ group of secessionists from across a broad political spectrum had 62 seats in the 135-member regional parliament.”

Monday morning, a morning report on Seeking Alpha by Ian Bezek elaborated on the news.

The leading Catalonian party in favor of independence won 40% of the vote on Sunday, along with 62 seats in the Catalan parliament. Along with a minor pro-secession party, the pro-independence forces have an absolute majority in the parliament, but fell just short of winning the 50% of the vote necessary to force a direct referendum on independence.

Spanish president Mariano Rajoy has said secession would not be permitted under any circumstances, and that Catalonia does not have the right to self-determination.

The relatively conservative Rajoy has been doing his best to keep Spain together, but the Eurozone in general is a mess.

Beset on its Western edge by the current Catalonian issue and the still-simmering desire of Scottish secessionists in the UK, pummeled to the South by a massive and highly-suspicious “refugee” tide, menaced to the East by a Russian president who acts like the re-incarnation of Peter the Great and mired in a perpetual recession ultimately caused by the Euro elites’ perpetually underfunded socialism, Europe appears to be slowly imploding, with the Catalonian vote only the latest evidence of what should be obvious by now.

The vote serious threatens to destabilize Spain at exactly the wrong time of Europe’s long fiscal and social nightmare, which, in turn, destabilized Asian and European stock markets and threatens to do the same to Wall Street Monday morning futures.

That latter observation is no longer a threat, Ian. It’s a reality. As of 10:45 a.m. EDT, the Dow is off 154 points after earlier hitting a negative 200; the broader-based S&P 500 is off an unpleasant 24 points; and the tech and biotech-heavy NASDAQ is continuing last week’s roller-coaster ride to hell, off 76+ points at the moment and threatening to plunge further.

(UPDATE: As of 1 p.m. EDT, averages are faring considerably worse, with the DJI down 265 and sinking, the S&P 500 off 42 and heading in the same direction, and the NASDAQ (with all its imploding biotechs) is off a catastrophic 120, a drubbing that would seem to put this average squarely in the bullseye of a full-fledged correction.)

The bad performance in the NASDAQ is almost solely attributed to the rout in biotech stocks. Way overpriced to begin with, all they needed was a simple-minded excuse to get the HFTs excited on the bear side. This is exactly what they got when the always opportunistic Hillary Clinton jumped on an essentially bogus report concerning the stratospheric upward re-pricing of a relatively obscure biotech drug. The Smartest Woman in the World got on her high horse and vowed she’d put those greedy biotech clowns in their place if she were elected president.

So take that, evil capitalists! And score this one as a WWE-style Super Slam for Hillary. (But send the Clinton Foundation a check, guys! She and Bill have been broke since Bill left office in 2001.)

C.M. Punk takes down two members of The Shield in recent WWE match. (Credit: WWE)
C.M. Punk takes down two members of The Shield in recent WWE match. (Credit: WWE)

Meanwhile, back on Wall Street… Bada-bing! The HFTs had their ursine headline. Seemingly within minutes, biotechs began their sickening decline to the abyss, feebly summoning the cohorts like Captain Ahab as he rode Moby Dick to the bottom of the sea of perdition. There’s been no respite ever since, even though the very next day after the pricing incident—which appeared to be something of a fraud—the reported price increase was instantly rescinded.

But wait. We’re not done with Blue Monday news just yet. Numerous reports have commented this morning on today’s release of lousy August housing numbers, with “Tyler Durden” of ZeroHedge predictably taking the most negative and wide-ranging tack on the topic:

“While the rest of the US economy was slowly but surely reentering a recession, with the only two pieces of silver lining being the relatively strong, if unbelievable, jobs data (driven by low-wage paying jobs) and the US housing market, moments ago we just got the latest confirmation that one of these two final anchors is slowly falling apart when the perpetually optimistic housing industry organization, NAR, reported that August pending home sales dropped -1.4%, on expectations of a 0.4% increase, and down from a 0.5% jump the month before. Confirming that the Chinese ‘hot money parking’ bid is finally ending, this was the fourth consecutive miss in a row.

“The breakdown shows that the traditional hot bed of pending home sales, the Northeast (NYC, Boston, DC) led the drop: here the pending home sales index fell 5.6 percent to 93.3 in August. In the Midwest the index inched down 0.4 percent to 107.4 in August, and is now 6.5 percent above August 2014.  Pending home sales in the South declined 2.2 percent to an index of 121.5 in August but are still 4.1 percent above last August. The only thing keeping up the pending home sales market remains California, and the West rose 1.8 percent in August.”

Tyler’s seemingly mysterious reference to China is amplified here:

“… as we explained previously, once China fully cracks down on those pesky hot money outflows, one can kiss the California ‘pending’ housing market goodbye.”

As China itself has imploded—at a speed even more violent than the biotech crash, BTW—their own oligarchs and elites have been buying U.S. bi-coastal real estate at a frantic pace in an attempt to avoid this mess by parking their money over here where, at least for now, they won’t be executed for investing the wrong way.

But August saw an abrupt slowdown in this action in the overly hot San Francisco, D.C. and New York City real estate markets. All three were still up, to be sure. But the rate of increase has slowed dramatically, indicating the outside money that’s been driving prices up is rapidly disappearing due to the Chinese government’s crackdown on this activity. Meanwhile the rest of the country’s real estate activity with regard to those pending home sales was off massively.

Recession anyone? Let’s jack up those interest rates and help things along, eh?

Do you ever get the impression that absolutely no one in Washington, D.C. gets anything that’s going on in our economy at all? Or cares?

Newscaster Howard Beale (Peter Finch) in the midst of his famous anti-establishment rant in the still-timely 1976 film "Network." Is Donald Trump Beale's reincarnation? (Screen capture from YouTube video highlighting this pivotal scene)
Newscaster Howard Beale (Peter Finch) in the midst of his famous anti-establishment rant in the still timely 1976 film “Network.” Is Donald Trump Beale’s reincarnation? (Screen capture from YouTube video highlighting this pivotal scene)

Pundits and talking heads in both political parties are still scratching their heads over the continuing success of the insurgent Trump and Sanders presidential campaigns. Both are way-out kind of guys, and both have zero in common with the political establishment in terms of philosophy and approach. Is it any wonder that the voting public is persisting in its “irrational” love affair with both these political misfits?

Candidates who seamlessly mesh with our current, oligarch-controlled political establishments in both Tweedle-Dum and Tweddle-Dee parties are, at least for now, not even remotely on the average voter’s radar screen. John and Josephine Q. Public have been gamed more than a few times at this point and are ready to clean house the way that Robespierre once did.

Like the Catalonians and the Scots just for starters, the whole world is gradually waking up to what’s been going on, courtesy of all those smart, impossibly wealthy elitists and their pet politicians. Like “Network’s” Howard Beale, the proles are getting as mad as hell and resolving not to take it anymore. Smart-ass pundits aside, this attitude is not solely the property of Republicans who have begun to loathe their party’s current milquetoast leadership. The completely out-of-touch Democrat detritus, under the cynical and decaying leadership of Nancy Pelosi and Harry Reid, has also alienated the bulk of its traditional voters as well.

The upshot, at least in terms of what’s covered here: we continue to see early rumblings of this bad voter attitude being reflected in 2015’s relentlessly downward-plunging meat-grinder stock market. Everybody ultimately wants out of the mess. As poet e. e. cummings once wrote, in his uniquely avant-garde way,

...listen: there's a hell
of a good universe next door; let's go

There may be some opportunities in this market either tomorrow, Wednesday (ongoing illegal quarterly window dressing) or later in the year, but certainly not today. It’s getting ugly today, and it’s high time for someone, somewhere to show a little fiscal and social leadership before the entire political and investing system collapses.

No trading tips today, obviously. It’s days like this that makes one think that those “doomsday preppers” we’re supposed to laugh at on cable TV aren’t such nutcases after all.

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