WASHINGTON, April 5, 2015 – Happy Easter Sunday to all. Whether you a secularist who believes only in the Easter Bunny, or a more spiritual being who ponders the more serious dilemmas of life today and the Resurrection and the life to come—the real reason for the season—here hoping you and your families have enjoyed this Passover and Easter weekend. May you have many more.
Unfortunately, as far as Wall Street is concerned, it’s unlikely that any colorful Easter eggs are waiting to be discovered in last week’s already damaged portfolios. With stock markets closed for the traditional Good Friday trading holiday, our government in its superior wisdom nonetheless chose to deliver March’s unemployment numbers anyway.
Oops. Those numbers were très bad, and futures tanked big time. Problem was, there was nothing to do about it since, as we’ve already mentioned, markets were closed.
If you look at 2015’s domestic stock markets with a critical eye, one thing stands out, dating back to the first day of this new year. Volume and direction tell us that on balance, the big boys have been huge net sellers of stocks over the past three months, indicating their compelling desire to get liquid, for whatever reason.
The whipsaw action in the markets has given us plenty of evidence for this, alternating big up-days with bigger down-days, or, lately, several big down-days before a single big up-day, followed by two or more days going down once again. This has resulted, oddly enough, in some new market highs. Problem is, they’re not very convincing, and the whole post-Great Recession bull market edifice, carefully built by the Fed to create the appearance of asset inflation, is looking pretty wobbly at this point.
Part of the continuing angst, of course, is the palpable fear on the part of the bulls that we may very well begin our return to something resembling normal interest rates. This after several years of party-time for the large institutions who’ve made tons of filthy lucre on the backs of taxpayers who’ve loaned them the money at zero interest rates. All this was supposed to have driven us back to normal consumption and spending, ultimately putting people back to work.
But it didn’t work that way.
Instead, corporations have been using the Fed’s free money to buy back stock, creating the appearance of steadily higher profits over the years as “profitability” is computed on fewer and fewer shares.
This does wonders for corporate balance sheets and for the value of stock options for the already rich bigwigs who run the companies. But it hasn’t really done much to put the lower-middle and middle-middle class back to work, evidenced by the more comprehensive and persistently high U-6 unemployment measure, which is never officially reported or discussed in the media. (The current number is between 10-11 percent, much higher than the phony number that’s reported in the press.)
Friday’s new jobs number was a disaster, pure and simple. In the neighborhood of 126,000 new jobs were created in March, vs. the 200,000 plus numbers the administration has been crowing about recently as evidence of an economic recovery going according to plan.
Fact is—as the Maven never tires of reminding his readers—that in the waning days of the Bush administration, we were told again and again that we couldn’t reach “full employment” until and unless we averaged over 300,000 new jobs per month—a number we’ve hit maybe once since the Chicago gang came to power and began dismantling the middle class it purports to champion.
Which brings us to Monday morning, whose opening trading action we can only guess at. As we write this late Sunday afternoon, futures are actually flat. But when we get a better read at around 10 p.m. Sunday evening, we suspect things will be comfortably in the red once again where the futures are concerned.
Whether a miserable Monday open—if indeed we get one—will give us a clue for the first trading week of April is anyone’s guess. But trading may hinge on what Friday’s numbers tentatively tells us—namely, that the Fed interest rate may very likely happen later rather than sooner. Which would mean, for bulls, that once again, bad news is good.
More prudently, we see investors continuing a slow shift to foreign stock and bond ETFs, which should begin to outperform U.S. stocks after a long drought. But it may also mean that the currently powerful dollar may slip a bit, giving those poor, miserable gold traders a break for a change, after over a year of no fun at all.
Early April trading tips
We’re going to stay on the sidelines until we get a sense of direction on Monday. If markets “gap down” and begin to tank, we’ll likely nibble at some shares of IAU, the gold bullion ETF that’s easier to buy with regard to price per share; or maybe SGOL, the Swiss-held bullion ETF that we can trade at our brokerage without a commish.
We might get back into the copper ETF, JJC, since rumors persist that China is trying to stimulate its economy maybe a little bit. This could also lead us into AAXJ, the East Asian ETF (minus Japan), and maybe PEK, the recently hot ETF that functions for Chinese stocks somewhat like DIA, the Dow Jones Industrials ETF that represents America’s biggest companies.
But aside from this, there might not be much to do unless we can get a clearer read of the tea leaves, something made harder by the administration’s objectively stupid faux treaty with Iran, likely the greatest Western foreign policy blunder since Neville Chamberlain obtained “peace in our time” from Herr Adolf Hitler. That self-congratulatory bit of elite, upper-class lunacy lulled the Brits back to sleep just long enough for them to wake up and see the continental dominoes falling at a record pace.
World War III, anyone?
It’s all just a mess. We just don’t like to trade this fast and furious, with apologies to Vin Diesel. But in-and-out seems to be the new rule of law for investing if you want to make a quick 1 percent on a trade—a number that’s hardly worth the heartache in the real world.
Few professional trading and investing systems are working well now since everyone, young and old, has gotten completely confused and trigger-happy, including, alas, the Maven, who’s been experiencing a big league batting slump in Q1 2015.
The back-and-fill trading nonsense is unlikely to unravel anytime soon. But as long as the big boys continue to sell their overpriced garbage to the clueless little guys that the late Joe Granville once labeled “the bag-holders,” we remain very cautious as we move into Q2 of an already very uncertain 2015.