WASHINGTON. Yes, you read that headline correctly. Mr. Market’s current, nasty, violently bi-polar action “cuts your heart out.” Along with that observation, CNBC’s much-maligned bad boy Jim Cramer gets the Federal Reserve’s current modus operandi exactly right via a Monday online report appearing on that network’s web site.
“CNBC’s Jim Cramer said early Monday the market is displaying “classic bear market behavior” with U.S. stock futures pointing to a rise of more than 200 points for the Dow Jones Industrial Average after last week’s drubbing.
“‘Talk about classic bear market behavior,’ Cramer said in a tweet before the opening bell. ‘We crater all week and then we open up huge on nothing, but because we are so oversold it is hard to let things go.’”
Cramer was commenting on Monday’s long-overdue and quite-welcome market. While he was happy to see it, he suspected that this bullish move would have minimal staying power.
“Cramer said on CNBC’s Squawk Box, ‘It’s a bear market rally. You go down really hard last week. And then you come in on Monday and it’s up a lot. People come in. They buy it and lose money.’
“He added, ‘I have tremendous contempt for this market, because every time you try to make money with it, it cuts your heart out.’”
Cramer, others condemn November’s contemptible market action and the Fed
Add this columnist to the Cramer queue of those seething with “contempt for this market.”
On the surface, at least, we’re witnessing a number of simultaneously market-depressive activities. These deteriorate into something far worse due to a continuous stream of relentlessly negative political media reports. Nearly 100 percent of such “reports” refuse to find anything good in the Trump administration.
Other items pile on to this already sour mood. We witness daily any number of world hotspots worsened by the West’s suicidal “no borders” immigration policies. Add a US-China trade war in which China thus far refuses to budge. But perhaps worst of all, we must also factor in a US Federal Reserve that simply can’t see human reality beyond its hugely misleading big data plots.
“Cramer has repeatedly blamed the Federal Reserve under Chairman Jerome Powell for spooking the markets, saying central bankers need to recognize that the economy is slowing and they can’t move rates to a preconceived notion of so-called neutral.
“Cramer warned last week that investors should sell their stocks if they expect the Fed to hike interest rates next month.”
Tuesday morning’s trading action would seem to add credence to the last observation Cramer makes. Stocks jammed down hard from the opening bell. The Dow quickly plummeted over 100 points. That drop was likely due to the President’s renewed threats to increase tariff rates on China further. They could hit 25 percent from the current 10. The brutish layoffs announced Monday by GM also didn’t helpmatters.
Tariffs, technology theft and Chinese intransigence
The President’s trade comments were likely bluster. They intend to put Chinese negotiators on notice prior to this week’s G20 summit.
Thus, Mr Market must face the fact that Trump never makes a threat he’s not prepared to act upon. This morning’s action reflects sentiment that 25 percent tariffs on pretty much all things Chinese is a foregone conclusion.
The Chinese, despite massive damage to their own economy, have essentially offered the US hollow words and vague promises. They refuse to acknowledge their ongoing, large-scale theft of American patents and technologies. Essentially, they still refuse to abandon these illegal cut lucrative activities. Ditto on their monolithic, unfair trade practices. These affect not only the US but nearly all other national economies as well.
Trump gets blamed for “intransigence.” But it’s the Chi-coms, as usual, who are to blame. The media’s refusal to recognize this is another way they can weaken Trump’s pro-US position. This is precisely why they broadcast anti-administration falsehoods regarding this now very real trade war.
Don’t miss the next thrilling episode of this one.
Brief sunshine day for interest rates?
On the other hand, In a Monday commentary, Tim McPherson of Innovative Income Investor, saw at least a ray of sunshine on the interest rate front.
“Checking out Monday morning’s futures prior to the opening bell offered a glimpse of optimism. Interest rates continued to drift lower as the 10 year treasury fell as low as 3.03% before closing the week at 3.05%. We are now at the lowest level on the 10 year since mid-September.”
The negative power of declining economic benchmarks
On the other hand, Tim indicatest this welcome, if temporary, relief may be offset by negative data points.
“Last week we had a bunch of housing numbers released and generally they were so-so. Building permits were below expectations, while home starts were above (a very small amount). The home builders index dropped a good amount–to 60 from 68–no surprise to us and likely to slow building of new houses over the winter. Durable goods orders were below expectations. Crude oil inventories built by over 4 million barrels after a build of over 10 million barrels the previous week (no wonder oil prices are dropping). Consumer sentiment continues to drop with a reading of 97.5 in November–we need to watch this closely as the consumer drives the economy.”
As we wrap this CDN column – around 11:15 a.m. ET – stocks are attempting to recover somewhat. The Dow remains down, though that average is trying to find some stability at around 24,600 or thereabouts, a roughly 0.17 percent decline and a point loss of around 40 points. Looks like another Jim Cramer kind of day in a cyclical bear market
For their part, the tech-heavy NASDAQ and the broader based S&P 500 are fractionally higher. For now.
Where’s that Santa Claus Rally?
But green ink has been in short supply on Wall Street since just after Labor Day, so color us skeptical, just like Cramer. What is clearly a stock market correction of some magnitude is, in our opinion, slipping relentlessly into a cyclical bear market of unknown duration. We sound like a broken record — if anyone still remembers what that means. But the truth sometimes needs repetition to break through the noise.
This becomes more upsetting. The post-Thanksgiving period is traditionally a period of “strong seasonality.” Markets tend to end the year with a nifty “Santa Claus Rally.”
But thus far, we see zero sign of Santa. We can’t quite envision where he plans to step in.
For once, we’d love to be wrong. But the damage sustained in stocks thus far will prove difficult to overcome by year’s end. That jolly fat man needs to show up on Wall Street. Soon.
— Headline image. Angry bear. Public domain artwork via Pixabay.com.