WASHINGTON, May 19, 2016 – New York Boomers will very likely remember that legendary cut-price electronics retailer, “Crazy Eddie” Antar, a mainstay in area retail in the 1970s. His famous radio and TV advertising tag line: “Crazy Eddie’s prices are insane!” During days like today (and yesterday and the day before it), we find ourselves getting the urge to rehabilitate that tag line in 2016: “Wall Street! These stock prices are insane!”
Eddie eventually ended up in the slammer, convicted of massive consumer fraud.
It’s days like today that make the Maven wish America really did have a functional SEC that would do just the same for our current squadron of crazy, madcap, fraudulent stock market mass-manipulators. They’ve largely been responsible for putting share prices on a permanent roller-coaster of baffling price moves, making it well nigh impossible for any small investor to sleep peacefully at night.
Today, we’ve got that kind of action in stocks once again. After Wednesday’s 2 p.m. 180-degree downward price reversal on even the hint that the Fed might raise interest rates some time before 2050, stocks predictably followed through to the downside Thursday morning with the Dow bottoming at around a negative 200 points off Wednesday’s close.
Adding to Wednesday’s interest rate woes was a tit-for-tat devaluation of the yuan by those Crazy Commie Eddies in Beijing, raising the always ugly specter of a possible currency war. Previously soaring oil prices took a hit Thursday morning as well. Predictably, the Maven’s current income-centric portfolio also took a hit as such portfolios often do when there’s even the slightest whiff of a possible interest rate increase.
Not helping as well was the apparent terrorist downing of a Cairo-bound AirEgypt jetliner that had taken off from Paris earlier. Donald Trump tweeted his terrorist suspicions almost immediately, which the lamestream media denounced just as quickly, only to get brought up short when the U.S. government said that golly-gee, this could be terrorism. (You can see why Trump is freaking out institutional traders these days.)
Meanwhile, the sun hasn’t exactly come out Thursday afternoon—indeed, it hasn’t come out for about two weeks on America’s East Coast. But as of 3 p.m., bulls are making at least a feeble attempt to pull momentum back from those bad news bears, who clearly spotted an opportunity to wreak havoc on Wednesday’s markets.
Who knows where we’ll close? The bears clearly want another win today, preferring a market that’s insane. But the charts, such as they are, tell us we’re approaching short term oversold conditions in our current “Sell in May” festivities, and stocks could catch a bid. That’s particularly true in light of a Thursday afternoon announcement that demand for domestic gasoline has notably increased from what was expected.
Hmm. Could those lower prices actually be having an effect? Be sure to tune in Friday!
We, however, aren’t trying to guess the answer. We’re just trying to make some money. Bet you are, too.
Just snugging up some positions today. Profitably, we got rid of a longstanding position in PMT, the Pimco muni bond income ETF. We hated to leave this monthly dividend-payer, but we have to start thinning some of our interest-rate sensitive overweight positions even though we’re not exactly sure when or even if the Fed is going to kick those interest rates up another notch any time soon.
To make ourselves feel a bit better, we picked up another 100 shares of the double-short S&P 500 ETF, aka SDS. Good move.
But we also got back into a partial position in Teekay Tankers (symbol: TNK) Tuesday. BAM! That was a mistake.
When earnings were reported “below expectations” as we thought they might be, and when a modest dividend cut followed, traders hammered the living daylights of that nominally high-dividend paying stock, and thus hammered the living daylights out of us as well.
Since we regard this stock as a moderately prudent speculation, we picked up some more when they beat those shares up some more. We’re up on the new trade, thought down on the rest, so we’ll ride it out for awhile.
Otherwise, slow and cautious. This market is like certain kinds of cancer. You don’t want radical surgery just yet. So it’s watchful waiting for now.