WASHINGTON, June 9, 2016 – Thursday trading is off to a mediocre start, with all major averages off roughly 0.33 percent as of just before noon EDT. Reasons the happy-talking pundits are giving for this action range from WTI crude oil prices backing off a bit from Wednesday’s intermediate-term high of $51+ bbl., the tiny drop in the Euro, the lower-than-low low bid for 10-year U.S. Treasurys. You name it.
Meanwhile, the Maven got a news flash via the message section of his online trading screen, a portion of which included the following interesting tidbit pulled from the Reuters news wire:
“APPLE INC <AAPL.O>, Wednesday close $98.94, -0.30 pct premarket The U.S. Department of Justice asked the Supreme Court to overturn an appeals court ruling that had favored Apple over Samsung Electronics Co Ltd <005930.KS> in smartphone patent litigation, and asked that it return the case to the trial court for more litigation.”
Let’s take these one at a time.
Soros & Co. vs. Markets
First, Thursday morning’s lumpy trading activity. Despite the numerous reasons the blow-dries are giving as per our lede, the Maven figures that the market is somewhat in the red right now because:
- Stocks need to correct at least a bit from this week’s irrational exuberance, which assumed the Fed might hold off raising interest rates maybe until the 22nd century.
- George Soros, the world’s only Marxist-Stalinist-capitalist, raised his unpleasant head Thursday, indicating to the media that after a personal hiatus, he’s busily shorting markets and investing in gold in his personal accounts because we’re all doomed, even as robber-baron-style capitalist Carl Icahn, who at least partially agrees, appears to be doing the same.
We’re giving reasonable credibility to both observations. After last week’s rotten jobs report, there’s no reason at all to believe the Democrats’ and the MSM’s economic myth, which touts a robust U.S. economy and an unemployment rate that’s now dipped to 4.7 percent. NOT.
Reality tells us this is lousy news for our lousy Administration. It can only be successfully spun as positive to the brain-dead and to the current crop of millennial voters who can no longer connect cause and effect when they fill out their ballots.
Frankly, we detest George Soros, whom, we think, (somewhat) secretly supports some flavor of 21st century World Government (with himself as the Central Banker) while massively supporting Hillary Clinton, Democrats, and leftists around the world via his nested, secret involvement in so-called charitable institutions and his ownership of Clinton, Inc.
However, Soros’ market pronouncements tend to carry more authority than the fatuous observations of CNBC’s self-designated Smart Money TV People, either because Soros sees what others cannot, because he has enough in the bank to manipulate stock markets and the economies of entire nations. Or both. We have an iffy attitude toward Icahn as well. But Soros and Icahn have the $$$. We don’t.
That said, both these J.P. Morgan-style buccaneers haven’t gotten wealthy beyond avarice by betting wrong all the time. The current world economy, such as it is, has become a Hall of Mirrors even more splendid than Louis XIV’s at Versailles.
Those with the power, money or audacity to see past their own reflections know full well to expect some kind of random nastiness a bit later this summer and perhaps for longer than that. And this is what’s messing with market heads, along, no doubt, with bored HFTs who are launching yet another slow-moving shorting attack against the averages. We’ll see how this plays out.
DOJ Does Not Heart Apple
With reference to our second major topic above—We have watched since January 2009 how seemingly random individual and corporate targets are attacked by the Obama Administration’s toads and lackeys should they veer in the slightest from Washington’s PC and/or totalitarian orthodoxy.
To wit: Why in the living daylights would any American government re-open a case one of this country’s largest and most influential companies has already won against a talented, major, but notably unprincipled foreign competitor?
It’s been clear for years that South Korea’s mega-sized Samsung Electronics Co. and its price-competitive smart phones are currently so clever, so sexy and so relatively cheap because the mother company is adept at swiping Apple patents, technologies and trade dress.
wholesale theft reverse engineering effort has been crystal clear for years. Only Samsung’s crackerjack defense team has kept the company’s non-case alive, despite the fact that Samsung has long been a major Apple iPhone subcontractor and clearly possesses the motive and desire to swipe at least some of Apple’s smart phone technologies. It’s cheaper than ground-up R&D. Ask the Chinese.
So why, with Apple (symbol: AAPL) increasingly likely to win its case outright if the appeals court decision in its favor is allowed to stand, why is this ever business-friendly Administration’s Department of Injustice requesting that the case be re-opened to be “litigated” again, meaning Apple will have to spend even more millions on non-productive nonsense for a case it’s already essentially won?
The Administration’s action is even more baffling when one considers that Apple CEO Tim Cook is openly gay and, like the entirety of Silicon Valley’s mega-rich entrepreneurs, fully on board with the Administration’s general trashing of the middle and working classes in favor of open borders and unlimited, wage-depressing H1B visa expansion.
But it’s not so baffling if you understand this Administration’s Stalinist tendencies. You either support The Party 100 percent, or you’re booted out. Cook’s lockstep support for Washington’s liberal-left tilt, income redistribution tic and political correctness has been fine up until recently. But his refusal to give up Apple’s privacy technologies without a fight when the FBI demanded it in its San Bernardino terrorist case investigation just didn’t sit right with the so-called Justice Department’s my way or the highway ethic.
Ergo, since Cook wasn’t supporting the Administration 100 percent of the time, but only 99 percent of the time, it was time for official Washington to screw him by attempting to reverse the company’s victory in court against Samsung, costing Cook, Apple, its shareholders and its legion of customers time and money that could have been spent on something productive, like more R&D.
We’ve wondered aloud to friends and enemies alike as to why at least 95 percent of America’s mega-wealthy CEOs, entrepreneurs and largest companies support, lock, stock and barrel, the Democrats, the closest thing we have to a pure socialist party in this country today (Bernie Sanders aside).
Is it because they are so wealthy and/or so stupid they don’t see what they’re doing to the country whose free-spirited environment allowed them to gain riches? Or is it because the government and its employees are so massively Democrat in number that these individuals and companies feel compelled to support these professional political crooks lest they be attacked by the massive, taxpayer-funded individuals and coffers of the nation’s fascistic but dominant party? It’s a chicken-or-egg riddle in the end. But it looks like today, pro-leftist Democrat CEO Tim Cook is the one getting the egg. It’s his reward for opposing leftist orthodoxy only one little time.
Let that be a lesson to us all.
Little action today. The Maven is still recovering from his trading day off Wednesday, during which he was waylaid by the time and effort it took to purchase his first car since the 2003 model year. The old 2003 Saturn VUE, and its nearly 200,000 mile odometer were both close to death’s door, the end being hastened by the decreasing ability to even find repair parts.
So, reluctantly but with reasonably good cheer, after just under 3 hours at our friendly local CarMax (CMX), we left the Saturn VUE behind and drove out of the lot with a formerly-leased, low-mileage, 2013 Ford (F) Escape, one of the old Saturn’s updated competitors. So far, so good, the most amazing detail being that the Escape’s 2.0 liter turbo 4 puts out roughly 50 more horses than the old VUE’s 6-cylinder, made-in-Great-Britain Saab-branded 6. Clearly, technology has changed over 13 years.
Trading technology has changed over that time as well, to the point where veteran traders like the Maven are increasingly baffled by the action and are trying to recalibrate old techniques that always worked historically but don’t work so well in 2016.
We’re mainly victims, currently, of high-frequency trading firms that game the system to create markets and trading situations that appear on our home-gaming screens much differently from the way they really are to those devious, algorithmic supercomputers driving the action. This in itself wouldn’t be so bad if the Feds were actually enforcing the law to keep the game fair, but nothing doing. They don’t want to jeopardize current potential employment with these fat cat Big Boyz once they retire with massive, full 20- to 30-year government pensions that we pay for even as our 401(k)s evaporate.
In other words, we are trading more frequently than we’d like, given that the Boyz have had markets trapped in a trading range since at least late 2014. If you slip in at the bottom and slip out near the top, you can still be okay. But you have to be nimble.
With the market and representative stocks taking what looks like a significant, if small downturn this morning, we’re using this probably indicator to take a couple of positions off the table.
We’d made an earlier bet on a nice up move in the PowerShares Agriculture ETF (DBA) back when no one was buying this vehicle. After yesterday’s sharp, parabolic short term spike, we decided to just get out this morning, probably a good short term decision. We like this area, though, and if the market encounters red ink over the summer, we’ll likely get back in. No point in leaving money on the table now, however, when it looks like DBA is experiencing short term weakness.
We’ve also unloaded a small position in QQQE, the Direxion equal weight version of the quite tech-heavy NASDAQ 100 index. Tech’s had a nice run up recently, but that, too, could be taken back short term.
Exit, stage-right, as well with EPI, the Wisdom Tree India ETF. Tiny profit here, but the near term direction looked weak this morning, so bye-bye.
On the other hand, after struggling for days to purchase the Grey Market OTC edition of the new Ares Management 7 percent preferred stock (ARGMP), we finally picked some shares up at not the best price for this $25 par value preferred that will mature in 2024. (See our Prudent Man column on preferred stocks for details on this terminology.) We’ll devote a future column to the weird world of the OTC Grey Market, where retail investors shoot at targets they cannot see.
Preferred stocks without a redemption date will likely get hit when the Fed does actually raise interest rates. But one that must be redeemed at par in the fairly short term, like this one, should be relatively immune to market hits.
Besides, why sniff at a 7 percent yield. It’s better than what you’re likely to get on your parked funds for probably at least the next 10 years at the rate we’re going.