WASHINGTON, November 20, 2014 – There is some ominous stuff going on in the business background today. Maybe that’s why stocks are holding back again this morning, in spite of boffo news from the Philly Fed.
According to Fox News Thursday morning
The head of the NSA issued a blunt warning Thursday to lawmakers: China can shut down the United States.
The grim forecast came from Admiral Michael Rogers, the director of the National Security Agency and commander of the U.S .Cyber Command.
Rogers said he believed China along with “one or two” other countries had the capability to successfully launch a cyber-attack that could shut down the electric grid in parts of the United States.
Rogers reiterated that if the U.S. remains on the defensive, it would be a “losing strategy.”
Speaking to the House Intelligence Committee, the NSA director said the cyber threat was “so real,” and that agreeing to an international code, a sort of “laws of law” in the cyber realm is urgent.
Back in 2005, the Maven was living in another world, having come in as a contractor to help members of a Bush Administration presidential advisory committee to draft a cybersecurity report with recommendations for improving the situation.
To make the usual long story short, the business and academic members of the committee—focusing intently on the Internet alone—steadfastly refused to engage brains and investigate the nation’s highly vulnerable electricity grid infrastructure as well. The final report focused on Internet security alone, not surprising, given most of the responsible subcommittee’s involvement in that particular business area.
Unhappy administration officials ended up either ignoring or refusing to help publicize the one-sided report. They were seriously worried even then about how easy it might be to take down the nation’s electric grid which, at least at the time ran not on the Internet but on its own antiquated computing system.
That was the same system, which, as you may recall, proved so inefficient a number of years ago. That’s when a severe, rolling blackout that started either in Ontario and/or upstate New York quickly spread to engulf much of America’s northeast. No one seemed able to pinpoint the problem or to bring it to a halt. It took a considerable amount of time to get things back up and running, but not before the businesses and individuals affected by the situation lost millions of dollars of work time and profits in the process.
Imagine if something like that were to hit the entire national grid today. And it could, which is part of why the Chicoms and the nefarious forces of Czar Vladimir I and North Korea’s latest Dearly Beloved And Adorable Leader are probing our systems daily, preparing ultimately to bring them down without warning.
The 2005 cybersecurity report couldn’t have been bothered by that looming threat. It apparently never occurred to these guys that their precious Internet will go right down with the power grid no matter what security measures they’ve taken.
All this is typical of the kind of leadership we have in government and industry. If it doesn’t profits these mental morons this very week, or at the very least this quarter, who the hell cares?
Worse, in spite of Admiral Rogers’ warning, the Obama Administration hasn’t lost too much sleep over this either, preferring to occupy itself with what’s really important: politics.
As in trashing Republicans 24/7 in the fine Alinsky tradition; taking over one-sixth of the nation’s economy via the creeping Obamacare menace; and—as of this evening we are told—springing a massive, open-ended, wage-destroying and nationally suicidal amnesty plan on a country that just voted against it overwhelmingly.
We should change this president’s title to Emperor Obama. Or maybe to Comrade Hugo Chavez Obama. No hugging or learning goes on in the porches of this man’s brain. It’s his way or the highway, and the hell with what those “stupid” American voter just said.
The Republicans—wisely, sad to say—probably won’t vote to impeach this childish dictator, because racism. So expect two more years of messiness before the voters get their final big chance to pull this once-great nation out of a very deep ditch.
Take what we’ve just discussed, add in that little matter of ISIS, toss in a dash of the Administration’s game of patty-cake with Iran’s Islamofascist ayatollah’s, and you have the worried background for our current stock market malaise, with a hat tip to Jimmy Carter.
On continuing low volume, the market is slipping almost imperceptibly, seriously afraid that any trigger at all in these areas could send things crashing down without enough time to escape. The jagged wall of worry created by this Administration almost assures us of that, as there’s no longer any confidence at all in this president or any of his incompetent allies.
That’s why today’s ridiculously good news from the Philly Fed doesn’t seem to be helping markets much, at least as we approach the noon hour Thursday. Stocks are essentially flat on all averages except the tech-heavy NASDAQ, which is doing a modest little dance at midday.
As for the Philly Fed? Its latest report this morning claims that factory orders in its mid-Atlantic region expanded at their fastest rate in years.
The Philly Fed reported that business activity leaped a monstrous 20 points, from 20.7 in October 2014 to 40.8 this month. That was an “unexpectedly” high number according to consensus, and the highest month-to-month jump in this index since 1993 when the economy was finally recovering from the previous savings and loan debacle of the late 1980s.
Great news, right? Wrong. Or maybe wrong. Some economists are already expecting a correction in these numbers. If not, it’s still likely that this report is something of an outlier, as economic measurements usually don’t jump that high in that short a time.
All this, plus the radical drop in oil prices, vs. what’s shaping up to be another winter example of global freezing, is keeping traders either confused or on the sidelines. We’ve stayed there mostly as well, but still can’t resist doing some tinkering.
Today’s trading tips
We’ve been laying low, mostly, having seen our early bets on the oil majors got straight to hell which finally forced us out of our positions in Anadarko (APC) and Hess (HES) yesterday. Wouldn’t ya know, they’re both up big time today. But that’s the way it’s been with the major oils lately, up big one day, down big the next, all while trapped in a narrow range.
So we decided to extract ourselves Wednesday, making a modest gain on that pair of trades. Too bad we didn’t wait another day. We did sneak into a bit of ConocoPhillips to replace what we sold, as well as adding to a small position in Devon (DVN). We’re now modestly up in both.
We wouldn’t mind getting back into APC and HES for the longer term as both have excellent business cases. But not while the heavy guns of the HFTs seem to be trained on them.
Even as oils recovered, at least for today, our income-generating investments took it on the chin this morning. REITs, utilities, Business Development Companies (BDCs) are taking a hit and look like they’re prepared to sulk maybe for a few days at least.
Perhaps that Philly Fed report was so jolly that traders in these issues figured the Fed would hike interest rates tomorrow and sold. (High-yielding/dividend paying stocks and preferreds tend to move inversely to interest rates because of those high yields.)
Whatever. We continue to nibble into issues like these because, at least short term, they’re about the only way you can make money off your money.
Otherwise, we seem to be in at least a minor corrective phase, so there’s no point in staying over-invested in such an environment.
More tomorrow in our weekly market wrap up.