WASHINGTON, January 22, 2018: Last Friday, stocks and traders went limp and the red ink began to flow, halting another tremendous rally week on Wall Street. The long threatened, Democrat-engineered stunt the administration aptly termed the Schumer Shutdown – the first Federal government shutdown of Donald Trump’s presidency – loomed large, influencing markets in a distinctly negative fashion. Averages closed down Friday in anticipation of a long, bloody, partisan DACA vs. budget battle in Capitol Hill, likely dooming 2018’s fantastic stock market rally.
Sure enough, that Schumer Shutdown became reality as this past weekend began, spinning negative, anti-Republican, anti-Trump headlines just as intended.
The MSM waxed ecstatic and rounded up the usual Republican suspects. Now, there would be no more GOP winning. Trump, the Republicans and their Deplorable friends stood at the brink of legislative defeat and electoral midterm disaster for daring to put the constitutional rights of workers, businesses and all American citizens ahead of illegal
aliens immigrants. It was high time for Senate Democrats to show those Republican whippersnappers who was boss, and they did it. The Schumer Shutdown put the Stupid Party in its place for sure.
Even better, that crazy President Trump and his intransigent, right-wing political advisor Stephen Miller – the man the Washington Compost sneeringly dubbed an “immigration advisor and White House survivor” – were only making matters worse for the hapless GOP.
Both men had the audacity to stand up to the Senate Democrats’ shutdown ploy, condemning it for what it was and still is: a power play for the Deep State elites. Miller dug in on the “DACA vs. American citizens” meme that once again played well in Peoria. The Donald himself tweet-bombed the Democrats for what the White House proudly trumpeted as the Schumer Shutdown. (And let’s not forget that Twitter hashtag #.)
The result: A disastrous defeat for the Republicans.
No, wait. A disastrous defeat for the Democrats? Did I read this wrong?
No, I did not. The Democrats were the ones that caved today. They suddenly dropped their raucously dishonest, pro-amnesty campaign that openly favored deliberately mis-named, illegal immigrant “Dreamers” over tax-paying American citizens – at least for the moment. The Schumer Shutdown was over almost before it had begun.
Most Democrats ended up voting with the Republicans (minus Mike Lee and Rand Paul) for another continuing resolution on the Federal budget through February 8. In return, the GOP promised to at least “discuss” the DACA issue, which was unconstitutionally created by Trump’s socialist predecessor to begin with.
An astonished tweet from Brit Hume summed up this unexpected turn of events pretty well:
I doubted it was possible, but Dems have actually lost a shutdown fight. Schumer has agreed to end the filibuster in exchange for practically nothing. Make no mistake: Schumer & Dems caved. What a political fiasco.
— Brit Hume (@brithume) January 22, 2018
In other words, it looks like Schumer and his far-left party got rolled good and hard.Democrat Fail, big time. For the first time ever, those invincible Democrats finally got blamed for this weekend’s absolutely unnecessary mini-government shutdown even by some of their generally reliable media cheerleaders. That in itself is passing strange, since the Republicans are the designated fall guys for all government shutdowns, mainly due, as we all know, to their legendary mean-spiritedness.
What really happened was this:
President Trump did what no modern Republican President or Republican Congress has done for some three decades. With the help of Steve Miller and other White House stalwarts, Trump dumped an overflowing DACA vs. Real Americans chamber pot on those dug-in Senate Democrats by wielding that instantly viral Schumer Shutdown hashtag. He stood up to the bullies. He fought for yet another promise he made to his voters. What a concept! A Republican who actually fights for what he believes in.
Word from the Senate cloakroom was that internal Democrat polling of American voters by Democrat datameisters over the weekend made it clear to Senate Minority Leader Schumer that the Democrats’ patented, never-lose, Shutdown Blame Game® was boomeranging badly on the Evil Party. That’s really what led to white flag the Democrats hoisted over the Senate chamber earlier today.
Not surprisingly, the Democrats’ radical Marxist base is apoplectic over this dastardly act of realpolitik by Schumer. That’s bound to make the next couple of weeks interesting in The Swamp. For once, we’ll all get to watch the spectacle of Democrats devouring their own. That in turn, will scotch the current fake news trumpeting the absolutely for sure “Blue Wave” that will return Congress to Democrat control during this fall’s midterm elections. Schadenfreude will be almost impossible to avoid on the right side of the aisle.
Meanwhile, as events in Washington rapidly evolved today, Wall Street opened sharply down Monday morning, echoing Friday’s gloomy close. Nervous investors, institutions and funds feared this weekend’s government shutdown would last weeks, perhaps months, or maybe even years for sure. Defense stocks in particular took a swan dive, since no Federal money would ever be spent in that sector again.
But the moment word leaked out that the Schumer Shutdown would shortly be no more, most Dow stocks did a quick 180. Shouted one CNBC headline:
Dow surges 142 points to record, erasing earlier losses as Senate reaches deal to end shutdown
(UPDATE: President Trump signed the budget extension, which also included additional tax cuts, as of approximately 9 p.m. Monday evening.)
The S&P 500 and the tech-heavy NASDAQ performed even better than the Dow on a percentage basis, with both broader averages scoring close to 1 percent gains on the day.
The Democrats have thrown in the towel on the DACA vs. Americans vs. the Federal budget issue. For now. But we’ll likely see this game played out one or more times in coming weeks. The market will certainly fluctuate, sometimes violently, as a result.
As for us, we’re looking to do something we don’t usually do, even though it’s advised all the time by the “experts.” I am considering placing trailing stops on some of my more volatile positions. This will be tricky in the current environment, as violent moves down can suddenly reverse just as violently to the upside, whipsawing investors out stocks they’d rather have held. But when things get really crazy, this simple method is often the best way to hold onto a nice gain if the worst occurs.
The danger of employing this tactic today is that the guys with the super-duper supercomputers can spot your and others’ trailing stops, pick them off at bargain prices, then ride the stocks back up again as you look on in helpless fury. That’s something I didn’t really have to deal with when I was in the biz in the 1980s. Today, it’s a 21st century reality.
As I’ve regretfully noted many times in this column, investing in stocks today seems far less influenced by dividends, earnings and technical analysis than it is by the latest headlines from Washington and the latest fake news spooned out by the networks. On the other hand, keeping your excess cash in a checking account or low-yield CD is even worse.
One final thing to keep a political eye on: If even half the hype surrounding that currently top secret 4-page House report on DeepStateGate is as hot as it’s supposed to be, look for more market-confusing headline chaos to buffett markets in the coming weeks.
This is an extraordinarily exciting time to be in stocks. But it’s also extraordinarily treacherous.
*Cartoon by Branco. Reproduced with permission and by arrangement with Legal Insurrection.
Disclosures: Terry maintains active trading and investment portfolios and owns real estate in Virginia, West Virginia, and Maryland.