WASHINGTON, November 29, 2017 – I’ve been told there’s an old Chinese curse that goes something like this: “May you live in interesting times.” Whether or not this legend is true, it is a virtual certainty that the fate of the (almost) annual end-of-year Santa Claus Rally, Version 2017, on Wall Street will be largely determined by what is – or is not – accomplished by Congress in the coming days and weeks.
We’re talking about that long-awaited, frequently promised (by the GOP) tax reform legislation as well as the annual agony over the usual Federal government shutdown scare. This year’s cliffhanger will be caused, as always, by Congress’ absolute inability to pass clean budgets without costly income redistribution schemes. Most of these “sweeteners” are routinely tossed in to please big city Democrat constituencies, although Republicans often join in the same impecunious fun. After all, it’s only the taxpayers’ money. With it, Congress can stage its own Santa Claus Rally.
For every remaining day of 2017 that Federal taxes remain on the operating table, Democrats and their lamestream media lackeys will insist that any GOP-led tax reform legislation at all is way too “risky.” That term is routinely deployed whenever it looks like the GOP might actually pass legislation of any kind.
An additional complication here: Who knows if the predictable cadre of 2-4 GOP idiot senators won’t torpedo tax reform at the last minute anyway, grandstanding away to offer proof – as if it’s needed – that they are not conservatives, but RINOs at heart? And there’s always that bevy of last-minute showstopper amendments that get introduced, throwing a monkey wrench into the usual complicated package that’s eventually passed. (Or not.)
Predictably, the Pelosi-Schumer gang will hold the Federal budget hostage as usual, perhaps leading to another “dreaded” government “shutdown.” They’ll blame this on Trump and the Republicans for this alleged disaster, of course. The media, led by the reconstituted and now secret Journolist 2 “reporters” will slavishly pronounce this as politically correct, papering over the Democrats’ traditional mendacity and propensity to lie when it comes to legislation that might actually help John and Josephine Q. Public.
To add flavor to this legislative witches’ brew, Little Rocket Man has just lobbed a likely test ICBM into Japanese waters, seemingly itching for an all-out conflict with the U.S. while testing the limits of American threats to its full-speed-ahead nuclear weapons program. This latest in a seemingly endless line of prococations has had zero impact on markets thus far. But this game is coming to a head, given that it’s now Christmas Season in the U.S. as well as preview season for the upcoming, South Korea-based Winter Olympics, scheduled for February 2018. I.e., it’s just the right time to cause real trouble.
We’d guess that Rocket Man would love to destroy these games by scaring off potential attendees via mounting threats against its neighbors. But who really knows when it comes to monomaniacal dictators like this chubby, coddled clown.
We’re mentioning all this political stuff because the market’s current bout of irrational exuberance, Santa Claus Rally or no, can get guillotined in a New York minute if any of the political-military apple-carts just mentioned should be upset.
Wall Street has received at least one piece of relatively good economic news, however. A Federal judge has confirmed that Trump’s appointment of Mick Mulvaney as acting CFPB head after that rogue agency’s outgoing, dictatorial director, Richard Cordray, exited the post early. In so doing, he high-handedly “appointed” the agency’s chief-of-staff, the equally left-leaning Leandra English, as his “successor.”
Cordray apparently intends to run for the Ohio governorship next year to replace the current, term-limited governor, John Kasich. Given Ohio’s overwhelming support for Donald Trump in Election 2016, we’re not so sure how the hyperpartisan Cordray will fare. But in Ohio – my native state – you never know how the winds are going to blow off Lake Erie and environs.
The CFPB, the brainchild of that hard-left Senator from Massachusetts known even in academia as “Faux-cahontas,” was blatantly unconstitutional from the get-go. But that didn’t stop the Democrats from ramming it through Congress as part of the business-destroying Dodd-Frank monstrosity. So it will be interesting to see how this plays our, with Leandra English likely to pursue her “lawsuit” against the Trump administration up the latter with monetary support from… well, that’s still a mystery, wouldn’t you know.
In summary, we’d have to say that the markets really, really want to end the year with a spectacular Santa Claus Rally. But with stocks getting more and more overbought every day and with the aforementioned atomic bombs of headline risk waiting in the on-deck circle, any rally that gets underway could be violently blown up by just one of these political or military surprises.
We await the final word on the Santa Claus Rally. Stay tuned. Be sure to get your Christmas shopping done early.