WASHINGTON, May 18, 2015 – As of 2 p.m. EDT Monday, all major U.S. market indices are modestly up, although, as is typical of these 2015 melt-ups, volume thus far remains anemic. This may indicate that the bulls are not quite as numerous here as they once were earlier in the year.
The “sell in May” fear is still palpable. It appears that’s what a fair number of big investors are doing, as they usually do around this time of year, the better to enjoy summering in their mansions and yachts in the Hamptons with relatively few worries. Minimizing in advance their portfolio’s exposure for what’s often a long, hot and down summer on Wall Street is the way they roll. So selling and/or hedging is what they usually do around now.
Gold and silver are trying to rally again this week. This will likely fail at some point when The Powers That Be (TPTB) put the kibosh on the party as they’ve been doing with frustrating regularity for at least a year now. That’s why the Gold Bugs hate them.
We picked up a tiny bit of the Swiss silver bullion ETF (symbol: SIVR) today just for fun, hoping to make a few bucks at least on what might be yet another short ride.
We usually choose SIVR, BTW, because it’s a commission=free trade at our brokerage and because it lives in Switzerland and is backed by actual bullion in the vault rather than by pieces of IOU paper like the far more popular SLV.
This week, it seems, the market once again is indulging in Fear of the Fed. The Yellen Oracle is expected to hold forth on Friday with what may be the latest non-news hint on interest rates.
Meanwhile, the nonsense in Greece is once again likely to come to a boil on Thursday or Friday as ECB types and the far-left Greek government get together in Riga, Latvia, for yet another attempt to break their impasse. That won’t happen.
The hard left Greek government is flush out of options in these current negotiations. But we predict that as good Commies all, they’ll hold to the always successful model for negotiations pioneered by Ho Chi Minh during his endlessly jousts with the U.S. about peacefully ending the war in Vietnam.
Ho and his boys correctly took U.S. negotiators (like the French before them) as patsies and saps whose wobbly natures were already weakened by Soviet-financed Red Diaper Baby agitators in the U.S. Their “community organizing” managed to pretty much set the country against continuing that proxy war against communism.
Taking advantage of this backdrop, the North Vietnamese would promise any number of good things at a bargaining session and then, as soon as the U.S. negotiators were back on a plane to Washington, they’d violate every single thing they’d agreed to, the better to cement their military position for absorbing the south, something they’d always fully intended to do anyway.
This ruse worked brilliantly for Uncle Ho, setting a pattern for all negotiations by nearly any adversary vs. traditional Western powers ever since.
Western pols and their appointees regard job No. 1 as protecting their lucrative political positions of power. For that reason, they’re not prepared to take any negative publicity whatever at the negotiating table no matter what’s at stake, be it national sovereignty or what’s for lunch.
Whatever the topic, if the permanent cadre of lefty agitators out there threatens boycotts, strikes, agitation, violence or all the above if Western governments don’t cave, the Western politicians in power immediately begin to negotiation on their own capitulation, dubbing any potential agreement in that direction as a “big win.” The Commies laugh and scoop all the chips off the table.
It all effectively a mass Neville Chamberlain situation, and it works for the lefties (and, lately, for the Islamofascist thugs like the Iranians who are succeeding them) every single time. Which gets us back to Greece.
The current Communist government won’t back off their asinine position because they figure they don’t have to. They figure the Eurocrats are more worried about their banks and businesses getting stiffed in a Greek default than the Greeks are about the consequences, and they’re likely right.
Worse, we suspect that the wily Vlad “The Impaler” Putin has already worked out some kind of secret deal with his Greek fellow travelers involving an alternate energy pipeline, complete with financial goodies attached.
This the Europeans fear as well, as the effective transformation of an EU country into a New Iron Curtain Russian satellite nation would lead not only the world but the EU members themselves to question that shaky union’s continued viability.
The Greeks know this, and they’re playing they’re game of chicken for all it’s worth, adding real bite to their continuing intransigence. As good Communists, they simply don’t care, but know their opponents do. It always makes for a strong negotiating position, even if it looks weak.
So, taking continued fear of the Fed’s raising interest rates and the likely upcoming EU punt on whether a Greek exit from the Euro—aka, the “Grexit”—will happen in June, the stock market should remain iffy all week, with plenty of room for a terrifying Wile E. Coyote style waterfall collapse at any time.
Sinking money into investments in this environment is one nervous proposition. For that reason, we’ll again avoid any trading tips today, though we have to admit, those battered utility stocks with their high yields are looking tasty.
But we still pretty much plan to keep a 25-35 percent cash position indefinitely. It’s just too dangerous, and these markets are being massively manipulated by central banks.
This all makes traditional investing tough, as TPTB keep pushing stocks up, little by little, far beyond what they’re really worth. There’s little we can do about it except go along for the ride.
But at some point, TPTB are going to have to let go. And when they do, well, as American poet e.e. cummings once wrote:
listen: there’s a hell
of a good universe next door; let’s go