WASHINGTON, March 23, 2018: Wall Street’s Investing Chamber of Horrors picked up where Thursday’s bloodbath left off. Stocks got crushed again Friday morning when President Donald Trump threatened to veto Congress’ wildly excessive mega-spending bill. Stocks then attempted to soar when the President did sign it. Traders and computer algorithms alike decided “What the heck? Sell. Because Trade War. The resulting Friday Smasheroo 2 slaughtered whatever bulls remained in the market.
Overreacting to everything President Trump says or does has become a sick habit for America’s coastal-dwelling legion of overgrown, overpaid infants.
Smasheroo 2: The numbers game
CNBC has just reported the sickening details on Smasheroo 2. To wit:
“The Dow Jones industrial average dropped 425 points, with DowDuPont [symbol: DWDP] as the worst-performing stock. The 30-stock index also closed in correction, down 11.6 percent from its 52-week high.”
In other words, after spending roughly two weeks recovering February’s crushing 10 percent correction, the last two trading days have put investors back into an even deeper hell.
Other major averages crumbled just as badly.
“The S&P 500 declined 2.1 percent, with financials pulling back 3 percent. It also closed just outside correction territory. The Nasdaq composite fell 2.4 percent. The indexes, along with the Dow, had traded higher earlier in the session.
“‘People are a little worried ahead of the weekend. You can see that people have been buying a little bit of the options that expire next week which would give you a little protection over the weekend,’ said Patrick Kernan of Cardinal Capital. Kernan, who trades in the pit at the Cboe, said the sell off this week has been a lot more orderly than February’s decline. ‘There’s not lots of panic,’ he said.
“Week to date, the major averages posted their worst week since January 2016. The Dow and S&P 500 dropped 5.7 percent and 5.9 percent, respectively, while the Nasdaq pulled back 6.5 percent.”
Note to Patrick Kernan: Investors are “a little worried?” “Not lots of panic?” Seriously? The last two days have trampled the few remaining optimistic investors like a thundering herd of bull elephants. Even yours truly is feeling shell shocked after the stunning finale of Smasheroo 2. Which, in truth, is 2018’s Correction 2, The Sequel.
The #Resistance is costing investors a lot of money
Once again, today’s Smasheroo 2 edition of Thursday’s stock market pounding finds the #NeverTrump #Resistance in full scale revenge mode, bitching and moaning about a trade war that hasn’t actually happened. It’s like panicking about your imminent death even though you’re 30 years old and the very picture of health. Are investors really that chickenshit about President Trump’s attempt to straighten out our ruinously long-running trade deficit that’s caused by protective tariffs imposed by every other country?
So the Chinese threatened to retaliate. Maybe. WTF? Yeah, they might. They might put our farmers out of business. They might re-create the Great Depression. Maybe we’ll all die. But then, who the hell would they trade with instead of us? Who has that kind of buying power? This whole scenario looks more like the beginning of trade negotiations to this writer. But, of course, #NeverTrump.
Then again, when it comes to negotiating better international trade deals for real, today’s Royal Smart People on Wall Street can’t handle the truth. If you have any doubt, you saw saw the results of that kind of groupthink today. When investors and negative news-seeking HFTs and hedge funds decide to panic or have a hissy fit, they do it big time. That’s what gives us mad-slasher days like Smasheroo 2.
(BTW, it would be nice to see how much of today’s selling was on the short side.)
Bloodbath in major banking stocks
Banks, in particular, got clobbered, once again for the second day in a row. We’d guess that’s because stalwarts like JP Morgan Chase (JPM) are absolutely going out of business. Ditto Citi (C ) and Bank of America (BAC).
Oops. Perhaps some of the selling in BAC was justified. New York’s flamboyant, higher political office-seeking AG whacked BAC’s overpaid Merrill Lynch trading geniuses with a $42 million fine for lying about their trading genius.
Reuters has the specifics on the dirty deed:
“Bank of America Corp will pay a $42 million fine and admitted wrongdoing to settle claims by New York’s attorney general that it fraudulently routed clients’ stock trades to outside firms, including one run by swindler Bernard Madoff.
“New York Attorney General Eric Schneiderman announced the settlement on Friday, and called the fine the largest collected by the state to resolve an electronic trading probe.
“The attorney general said Bank of America Merrill Lynch had undisclosed agreements with several electronic trading firms from March 2008 to May 2013 to handle client trades.
“He said the bank told clients it was processing the trades in-house, even going so far as to alter trade confirmations, as part of an effort to make its electronic trading services appear safer and more sophisticated than they were.”
Gosh. We were actually up a few points in this stock, having held it for over a year in our large portfolio. We bet on a Trump Recovery.
The Thundering Herd screws up again
But leave it to those wacky thieves driving Merrill’s thundering herd to screw the mothership again. Merrill’s needless fibbing about their collective trading genius the same kind of crazy antics that caused their forced sale to BAC back in the thick of the Great Recession.
Guess that’s why these guys make the big bucks. In the lofty world of the 1 percenters, nothing succeeds like failure. Where have the rest of us gone wrong?
But no matter. Smasheroo 2 hammered nearly all stocks again today. Ditto any trader or investor with long positions. Looks like the Goldilocks market’s long, wonderful ride to the stratosphere is terminated. At least for now.
In closing . . .
Bottom line: Nearly everything was sold and sold hard in today’s massive market puke-up.
I don’t know about you folks. But I have a bottle of single malt Irish whiskey that’s calling out to me for some TLC. I need to deal with this now. If you’re in the market, you might want to do the same. Or at least the moral equivalent. It will help make the weekend seem better. For a few hours anyway.
In the meantime, let’s just imagine how low our favorite oversold indicator, the McClellan Oscillator, tumbled today. (We’ll pull the chart and insert it here as soon as it’s ready.)
There’s gotta be another bull market in there somewhere. Right? Right?