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Stock market get the post-Memorial Day Blues. Recession fears dominate

Written By | May 28, 2019
Quadruple witching, Bullard, tech heavy NASDAQ, Coyote, Roadrunner, Acme, post-Memorial Day Blues, recession fears

Screen capture of Wile E. Coyote, our favorite market metaphor, poised to take a long trip down to the canyon floor. (From YouTube video of Warner Bros. cartoon. Fair use.)

WASHINGTON. The Dow Jones Industrials (DJI) tiptoed into the green zone in early Tuesday morning trading action. But, as the day progressed, as investors waxed gloomier. All three major averages began to slide, and the Negative Nellies again reigned supreme on Wall Street. Chalk it off to post-Memorial Day Blues. No improvement in the China trade situation. Plus big New York banks and investment houses began to proclaim recession fears as if the US were already in one. Talk it up, guys. You’ll get us there soon.

More on today’s post-Memorial Day Blues

“Ten-year U.S. Treasury yields fell to 2.26 percent, their lowest levels since October 2017,” noted Fox Business. Fox reporters attributed the drop in yields to President Trump’s latest remarks on the China trade issue Monday.

“…on Monday [the President] said during a visit to Japan that the U.S. was ‘not ready’ to reach a trade deal with China.  U.S. tariffs on goods from China ‘could go up very, very substantially, very easily,’ Trump added.”

Wall Streeters would love to really unload on the President. In fact, a number of them did, including JP Morgan’s Jamie Dimon and nervous analysts at Morgan Stanley, according to Fox.

“Morgan Stanley economists said that U.S. economic growth will be undermined, forcing the Federal Reserve to lower interest rates, if the trade war is not settled soon. ‘If talks stall, no deal is agreed upon and the US imposes 25 percent tariffs on the remaining $300 billion of imports from China, we see the global economy heading towards recession,’ the bank said in a research note.”

Wall Street is stepping up at this point with its blame Trump chorus as wealthy bigwigs work with left-wing Democrats to do everything possible to make Trump look bad for Election 2020. Hence, today’s post-Memorial Day Blues and endless wailing about US recession fears. Expect more of the same to come.

About that China trade war stuff…

Re: the ongoing trade war. The Chinese are primarily to blame for the current impasse, having trashed pretty much everything US trade negotiators had placed in the draft agreement that had to do with China’s wholesale theft of American intellectual property. Apparently, unable to compete legally, the Chi-coms have made an irrevocable decision to compete illegally. By stealing all the good tech and industrial systems and practices they can. Mainly to save the time and bother of inventing stuff themselves.

It’s the typical Communist disdain for capitalists. But the current Chinese government is likely to corral a prominent spot in the Guinness Book of World Records for the greatest amount of industrial and technological theft in the history of the planet.

But let’s all blame Trump, shall we? Battlefield prep continues apace. The Democrats and all their rich friends ally with the Chi-coms to oust Trump in the upcoming elections. It’s all coming together nicely.

Once in office, the Democrats Democratic-Socialists will instantly solve the trade war problem by capitulating to the Communist Chinese government while declaring victory. And then resume the destruction of America that Barack Obama and his Marxist government embeds starting in January of 2009.

As the world turns…

Trading environment, stock picks and pans, post-Memorial Day Blues edition

Our large portfolio’s cursed position in Allergan (trading symbol: AGN) continues to reliably reap negatives. Even good news can’t help this broken stock as we learned again today.

Example: After months of analysts trashing this pharmaceutical company’s likely new and profitable drugs allegedly set for government approval, Allergan announced that the FDA has just approved a much broader application for Vraylar, its already on-the-market bi-polar medication. That’s good news indeed. Vraylar can now be prescribed for a greater number of indications with regard to bi-polar patients. More profits for an existing drug. Good news, right?

The stock blipped up nicely as the market opened. But then tanked badly as the day progressed. Apparently, the remaining legion of sellers still (justifiably) disgusted with this company’s recent market performance, used the early blip to sell, sell, sell. Getting into the real spirit of this year’s Memorial Day Blues, they obliterated the shares by the market’s closing bell on fairly low volume. Apparently, no one wants to take a chance on the company anymore.

Too bad for us. We continue to shed shares piecemeal. We hate to take losses like this, as Allergan will indeed recover. Some day. But leaving too much money in this one now robs us of the chance to use cash to make up these Allergan losses by investing in a company with better intermediate term prospects and with a more visionary management at the helm.

It gets worse

Worse, pretty much every stock on Wall Street is questioning its current level. And the questioning quickly turns to selling when sell-side analysts whip up those always-lurking recession fears, goading investors to sell like there’s no tomorrow.

Bond yields were down again today, meaning prices were up. It’s all part of the ongoing recession-fear trade that the media continues to whip up for political reasons. Problem is, this kind of propaganda-driven market will ultimately declare all the negative hype to be the perceived truth. That could, in turn, generate some kind of recession all by itself. A recession that would considerably diminish President Trump’s chance at a second term.

Which would be swell for the #NeverTrump crowd. The Russia Collusion crap proved to be a massive hoax as we all knew in advance. The “obstruction of justice” fabrication is also nonsense, but it’s the best weapon the Democrats can wield at the moment short of impeachment. Which the rabid gang of new and old socialists now noisily dominating the House would just love.

But in the end, a slam-bang recession would trump (sorry) everything else, as few Presidents ever chalk up electoral wins during an ongoing recession.

Slinking toward the exits

At any rate, recession fears dominated today’s trade. Bonds and utilities continued to do well in general. Yields continued to inflate as investors headed for the sidelines once again, grabbing onto those bonds and utilities for a little safe yield while they headed for their fallout shelters.

We’re slowly going cash. And once again, we shoulda sold in May. That damned cliché seems to be valid more often than not. Maybe we need to try out that new Allergan bi-polar  drug. Action like today sure feels like a major depressive episode if you’re an investor.

– Headline image: Screen capture of Wile E. Coyote, our favorite market metaphor,
poised to take a long trip down to the canyon floor. (From YouTube video of Warner Bros. cartoon)


Terry Ponick

Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Senior Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17