WASHINGTON, February 3, 2014 – Punxsutawney Pete and the legendary Super Bowl Indicator combined to land a one-two knockout punch on the stock market Monday, the first trading day of February 2014. When it was all over, the carnage, when combined with last week’s sickening trading action, began to resemble the kind of bloodbath that characterized Wall Street during the 2008-2009 post-Countrywide, post Lehman, post-everything debacle.
The increasingly irrelevant and clueless financial media blamed today’s scary and sickening swan dive on “the weather,” about as facile a judgment as you can get from these New York-centric scribes, no doubt bothered by the inconvenience of the Northeast’s latest close encounter with the snowy effects of
global warming climate change.
That’s an element of “established science” that Punxsutawney Pete clearly took issue with yesterday. He spotted his shadow and promptly dove into his plush burrow to hide out during the next six wintry weeks he predicted. Groundhog Day fans groaned at the prospect.
But there was even more for Wall Street to worry about yesterday as Seattle shellacked Denver 43-8 in one of the most boring Super Bowls ever. This, of course, moved the dreaded Super Bowl stock market indicator to negative for 2014. According to the tradition, which has actually been on target about 75 percent of the time, if a former AFC team or a new post-league-merger team wins the Super Bowl, the market will end up lower by COB December 31.
Seattle’s win clinched that negative bet. But actually, the deal was sealed at the end of the playoffs. Since Denver also dwells on the negative side of the Super Bowl Indicator, the fix for 2014 was already in at the end of the playoffs. The markets simply got to choose how they would lose this year. At least if you believe in the Super Bowl Indicator.
More likely, there were any number of underlying reasons behind this latest in a string of Wall Street sacks. Like Denver’s Peyton Manning, many still-bullish traders glumly sat on the sidelines this afternoon after the market’s close wondering what happened to the markets that had made them wealthy almost beyond avarice in 2013.
The real reasons behind today’s continuing debacle are numerous. First of all, stocks are retreating from the absurd pump-and-dump window dressing-based illusion money managers put over on the average investor during the final month of 2013, juggling their portfolios around to load up on apparent winners. It’s an illegal tactic they indulge in all the time with impunity since the SEC never bothers to enforce the rules against these big time Democrat donors.
The market was bound to back off from these phony December highs in January, after the close of the 2013 tax year as Wall Street shuffled the deck to commence a fresh year of fun and games.
Then there was that little changing of the guard at the Federal Reserve. Over the weekend, former Fed Chair “Helicopter” Ben Bernanke morphed from the Federal government’s chief central banker to a humble but (no doubt) highly paid staffer at the leftish Brookings Institution.
The Brookies no doubt wished to award Uncle Ben’s six years of unstinting cover and support he provided for the feckless and cynical socialists running Congress and the White House, neither of which did one whit to put the U.S. back on a firm financial footing after the ’08-’09 Crash.
Ben helped by running the printing presses flat out which made the Do-Nothing Party look relatively good, pumped up markets to a fare-thee-well, and served to paper over the massive transfer of wealth from the middle-class to Wall Street’s investment class who, like public employee and trade unions, then funnel mass quantities of campaign donations to the Dems to keep the transfer machine going.
We actually don’t blame Bernanke for doing this. He repeatedly asked Congress to do its job, but he was routinely greeted with a yawn. So after each Congressional hearing he attended, he dutifully trudged back to his office and opened the money spigots anew, hoping that rationality might once again surface in official Washington before the end of his term. It never did.
So now, as of today, we have a new chair, Janet Yellen beginning her term as Fed Chair. She’s already a veteran of the Fed, so it’s not amateur hour here as it often is with Obama Administration appointees. Yet she’s also reputed to be a “dove” when it comes to the printing presses. So perhaps Wall Street is trying to terrify her into suspending the current Fed bond buying “taper” after this month’s $10 billion reduction. After all, it’s always fun to haze the new kid on the block.
A third reason lurking behind today’s latest selloff might very well be some advance apprehension concerning this upcoming Friday’s employment numbers. Last month’s reported numbers were spectacularly bad, and the latest report, it is feared, might be just as lousy. Which is odd, considering that unemployment is allegedly falling rapidly, at least if you believe the Administration’s cheerleaders in the media.
Unemployment could even hit that magic number of 6.5 percent or less this month or next. Of course, once again, this magic is another Washington illusion. As we’ve pointed out exhaustively in this column, the unemployment drop is utter nonsense, since it’s largely due to unemployed workers dropping off the unemployment rolls and thus ceasing to be included in the count.
The real unemployment rate, based on the Government’s so-called U-6 numbers, which include these individuals and the under-employed as well, is still hovering around a sickening 11 percent.
But why is this? The answer to us is quite simple, and may be the elephant in the room, the primary reason behind the market’s current worrisome volatility and downside bias: the unknown fallout from the disastrous implementation of the disastrous Obamacare legislation.
With premiums running considerably higher than anticipated, and with the entire plan’s actuarial calculations in serious doubt, it is currently likely that mass quantities of consumer dollars are headed into the vast new health insurance redistribution stream.
In other words, money that might have gone toward buying new cars, new Cuisinarts, or even new mukluks for the next chapter of Snowmageddon are being funneled into a massive new social engineering program that will ultimately end up controlling at least one-sixth of the national economy.
So goodbye discretionary spending. Goodbye flush consumers. Goodbye middle class. And, perhaps, goodbye stocks.
Now, let’s square things up by adding in today’s pathetic manufacturing numbers. Factor in the problem of increasingly wobbly emerging market currencies and economies, which, interestingly, are being influenced by all of the above, and you get a swan dive like today.
Early pre-market indicators tonight are predicting a dead cat bounce for markets on the morrow. But those same indicators were indicating the same thing Sunday night as well. And look what happened.
Traders should be hedged right now, or mostly on the sidelines. We’re hedged but still lost some money today, though it could have been worse. Our utilities held fairly well, but the REITs got smacked along with everything else but gold, which seems to have a mind of its own lately. Or so J. P. Morgan’s traders would have you believe.