WASHINGTON, May 20, 2015 – Stock and bond markets were getting some much anticipated clarity from Washington today. Not.
Issuing the minutes of the April meeting at 2 p.m. EDT Wednesday, the Federal Reserve essentially confirmed that interest rates won’t be raised in June.
A new employment poll noted that 8.5 million Americans remain unemployed, with nearly half giving up on finding a job ever.
And, of course, remaining in background is the never-ending stream of illegal immigrants flowing into the U.S., courtesy of President Obama, who has dedicated his life to helping the unemployed and the middle class.
What a bunch of confusing hooey. Markets think so, too. After more “Waiting for Godot” this a.m., markets are now mixed in reaction to the Fed report, with the Dow Jones Industrials off approximately 30 points, the broader-based S&P 500 down about 3, and the slightly positive NASDAQ now also flipping into the red zone, down 1.5 points, all as we close in on the final hour of trading.
The Fed report thinks that the Q1 slowdown in the U.S. economy is “transitory” and things should begin to improve soon. That’s some optimism for the masses, for sure.
Gross domestic product (GDP) grew at a pathetic 0.2 percent in Q1, a number that will likely go negative when it gets its usual revision a bit later on. Meanwhile, Q2 growth is trucking along at an estimated 0.7 percent.
Small wonder, then, that a relatively new report from an outfit named Express Employment Professionals and derived from a commissioned Harris Poll notes that 8.5 million American citizens remain out of work.
The data further indicate fully 40 percent of that number have decided hunting for work is useless. They have permanently dropped out of the scrum.
Add to this the thousands of illegal immigrants streaming across the U.S.-Mexican border every day, then subsequently shipped in secret by the Obama Administration to places around the country where they’ll dilute the Republican vote, and you have ample evidence that:
The Fed has pretty much done all it can do to get the economy going
Nothing the Fed is doing really works any more; and
The Obama administration continues to assist the central bank with an immigration policy that assures ever-increasing hordes of future pro-Democrat constituents who will immediately go on welfare and food stamps, suck up whatever entry-level jobs might be left in a no-growth economy and rescue the dwindling middle and lower classes by ensuring that paychecks remain essentially stagnant forever due to perpetual downward pressure on wages.
That’s how the president—and the still Democrat-obstructed Congress—serve the people who elected them. It’s really kind of sad to see a once great country go down the toilet so quickly, but there you go.
But, in perhaps the greatest irony of all, on Wall Street, bad news is good. The stagnant interest rate environment looks to stay that way for at least several more months. That will provide corporations with more free cash they’ll use to buy back more shares, increasing apparent earnings per share even as the total figures remain flat to down.
In other words, if you have money to play with, which most people don’t, you can still put it to work with some degree of confidence by plunking more chips down to play the roulette wheel on Wall Street.
That’s not how we were taught to invest. But there you have it. That’s why most honest investment commentators and advisors, including the Maven, have been wrong to iffy in their prognostications for quite some time.
Traditional analysis is useless in this bizarrely surreal environment. Logic is out of fashion and investing is now a pure crap shoot, a guessing game as to where the lemming-like high-frequency trading (HFT) machines will scurry next, basing their massive and often fake trades only on headline news, some of which is concocted out of thin air.
Oddly, as a result of this confluence of non-information, this column may revive its trading tips section soon.
After all, if industries and markets move on purely political news regardless of corporate earnings, the Maven is pretty well placed to play this game even though he doesn’t believe in it. Living just outside the Beltway, he gets a good bit of DC’s nauseating scuttlebutt every day, the kind that folks in flyover country never get to hear.
So maybe it’s time to develop an investing system based on the rumor, innuendo and outright lies that drop from the sky here like manna from heaven every single day.
*Cartoon copyright 2015 by Branco, “Wall Street to Main Street,” courtesy of NetRight Daily.