WASHINGTON, February 26, 2015 – As it did most of Wednesday, the stock market is thrashing about with no particular direction except moderately down Thursday. From Apple to Greece and beyond, there’s the usual mix of good and bad news that has markets totally confused and confusing. Volume remains low.
Once again, trading action has been locked in one of those periodic “Waiting for Godot” moments. As in Samuel Beckett’s famous play, everyone is waiting for someone or something that’s ultimately not going to arrive. So investors fiddle, TV’s book-talking pundits bloviate, pulling wild prognostications out of a place where the sun never shines, and lots of nothing happens, giving markets that slightly negative, shopworn tone. After all, we’ve seen this play before.
With regard to Apple (AAPL), the stock got hit yesterday do to losing a patent-troll lawsuit which it will likely appeal.
Worse, those wily Chicoms, realizing they couldn’t compete against American tech products locally, scrubbed the bulk of those Yankee tech products—including those from Apple—off their own government’s “approved to buy” list. It’s the high tech version of us telling the Italians that they can’t sell pasta, wine and high fashion products over here, although the Chinese version is aimed at government purchases exclusively. (For now.)
That’s typical of the Chicoms. It may also be a bit of retaliation for U.S. moves against Chinese and North Korean government hacking of American computer systems. The North Koreans and Chinese are mounting attacks on our business and financial systems 24/7, but they don’t like it when the U.S. publicly rats on them. Spoils the illusion they try to create that both countries are eminently fair, peace-loving nations.
But back to Apple—the company has announced it’s holding an “Apple event”—“Spring Forward”—on March 9, most likely to announce the (probable) April date when the company’s new Apple Watch will actually go on sale.
Buzz is high on this product, but so is the dubiety of analysts. Fancy electronic do-it-all watches have been available for some time from other vendors, but these devices haven’t exactly been blowing corporate doors off, sales-wise. Like the iPods, iPhones and iPads before them, the Apple Watches are likely to break new product ground, which is always exciting.
But less exciting is the possibility that, since many of the watch’s available functions are already available, like the correct time, on existing smartphones, who will want to buy a fancy, expensive watch that duplicates those functions and, worse, must remain essentially tethered to an iPhone for at least part of the day in order to get a full charge.
Looks like we’ll just have to wait until March 9 to find out what kind of spin Apple will put on this new launch. But all this late-breaking news is at least temporarily halting AAPL’s soaring stock price which is still benefiting from the blowout first quarter numbers the company announced last month.
On the flip side of the buzz coin, oil prices backtracked from Wednesday’s optimism, moving back down this morning and affecting the Dow and S&P averages to the negative. This sector will remain weak for some time, but each day’s move seems wildly exaggerated to us.
Also in negative territory is the latest scoop from Greece, broadcast by the always negative, always skeptical (and often right) nabobs of negativism over at ZeroHedge. That site’s collective author, Tyler Durden, points to a run on Greek banks that seems to have been going on for quite some time, though it’s been hushed up.
“One of the biggest question marks surrounding the Greek [government’s monetary] negotiation and ultimately, bailout extension, was just how panicked was the Greek population and domestic corporations. Recall…the tension boiled down to this: the Troika did everything in its power to accelerate the bank run in order to crush any negotiating leverage [Greek Finance Minister] Varoufakis may have; Greece on the other hand was desperate to make its cash drain appear far better than rumored.
“Moments ago [Thursday morning] the Bank of Greece presented its latest, January, deposit data. And it’s a doozy: following a record €12.2 billion monthly outflow, greater in absolute and relative terms than anything experienced during any of the previous Greek crises and bailouts, the total amount of Greek corporate and household deposits has now tumbled to just €148 billion, down 7.7% from the month before, and down 10% since November. This number is in line with some of the more pessimistic expectations, and brings the total cash holdings at Greek banks to the lowest level since August 2005.”
(Bold lettering from ZeroHedge.)
Here’s a ZeroChart to illustrate the point:
Although we’d further observe that for decades Greece’s oligarchs, public employee unions and the crony politicians they both own have exploited the Greek government in the systematic looting of their banking and financial systems and the taxpayers who fund them—when they pay their taxes at all.
This open and blatant collective theft has been so obvious for so long that it’s encouraged Greek citizens into becoming lifetime scofflaws themselves when it comes to paying taxes.
In turn, the whole situation has transformed Greece into a canary-in-a-coalmine country, a picture perfect laboratory example of what happens when a people absolutely refuse to believe any longer that a democratically elected national government is working for them and not the wealthy—which in Greece would include the vast, abusive, and amazingly overpaid and union-represented government bureaucracy.
The same thing could—and likely is—happening in this country right now but just under the radar. But every day, more and more individuals, including even some of the densest voters, are figuring out how their life savings are being eroded or stolen by the Federal government as well as America’s own mega-rich and patronizing oligarchs.
As a result, more U.S. businesses and individuals are quietly going off the grid and heading for some kind of metaphorical Galt’s Gulch. If this situation persists much longer, it won’t end well, just as it’s not going to end well in Greece or in the Eurozone.
This increasingly obvious fact has given a palpable twinge of fear to any and all investors, particularly now that the market is trying to stake out new all-time highs. You can’t do that on the current low volume we’re experiencing, clear evidence that fewer and fewer people are drinking the government’s happy-talk Kool-Aid.
For the finale of our own state-of-the state troika of news items, we learned this morning that U.S. consumer prices were down 0.7 percent in January vs. an estimated 0.6. This followed a previous December decline in that measure of 0.4 percent.
Obviously, the precipitous drop in oil contributed to this surprising back-to-back decline in prices. But it does make one wonder why the Fed seems so intent on jacking up interest rates in such an environment.
Today’s trading tips
As we did Wednesday, we’re just tiptoeing into little positions in ETFs that look stable in the current uncertain environment. Otherwise, given that tomorrow is already Freaky Friday, we might as well wait and see what the usual Monday sell-off on March 2 will bring us.
At least we’ll be one day closer to ushering in the spring after yet another winter of our discontent.