WASHINGTON, May 20, 2016 – There’s really not much to report this Freaky Friday afternoon, so we’ll keep it short. We’re alluding, of course, to that already long-ago Disney flick wherein a pre-criminal Lindsay Lohan swaps souls and personalities with mom Jamie Lee Curtis. The same sort of thing seems to be happening in the market today, as those evil bears seem to be swapping souls this afternoon with a few furtive bulls.
As of 2:30 p.m. EDT, we’re watching bullish morning trading slowly evaporate as what ETF Digest’s Dave Fry likes to call “the Sell Program Express” attempts to leave the station on time. Once up close to 200 points today, the Dow Jones Industrials (DJI) have retreated to the up 75-85 point range as we write this.
Oil is down again—not a lot, but roughly $3 off its recent $50 bbl. WTI highs. The market can’t seem to break its recent habit of tracking oil prices as a proxy for everything, so that’s hurting a bit. So is Obama’s big tariff on Chinese steel.
Though it’s well-deserved—the ChiComs are indeed dumping steel at cut-rate prices around the world—Obama’s big tariff has political implications as well, likely this president’s feeble attempt to diss the Chinese a couple days after that country’s still-totalitarian government pretty much claimed the entirety of the South Asian seas as its “national territory.”
Equally bad, the Chinese had a hissy fit after the Fed’s Wednesday non-threat to raise interest rates at some point before the Son of Man arrives from the clouds to reclaim this wretched planet from the jerks who currently run it. To show their displeasure, they immediately devalued the yuan. Again. Who knew?
Add to this the controversy surrounding the apparent (but not yet proven) terrorist downing of an EgyptAir passenger jet in the Mediterranean, and the party the bulls had been planning for Friday seems to be in the process of having the air let out of its balloon. Who knows how things will close, though? CNBC’s blow-dried pundits probably do. The Maven does not. But at least the Maven is telling you the truth.
Utter confusion. Stocks were oversold short term, going into this morning’s opening trade. But in the main, individual stocks are still overpriced in our opinion, so the steady May downtrend may remain intact.
In a fit of irrational exuberance, we’ve been buying cheap shares of Teekay Tankers (symbol: TNK) in 400-share blocks or thereabouts, seeking an early term bargain as the company reported moderately disappointing quarterly results, which we expected. But, as happened to us early on with those Allergan preferred shares (AGN/PRA), we misunderestimated the determination of an apparent legion of panic sellers, plus Merrill Lynch’s nasty downgrade of the stock to “underperform.”
Attempting to average down, we continue to get surprised on the downside, so the selling may continue for a few more days.
Another reason for the selling in TNK is its 3-cent dividend cut from 12 cents per share down to 9. That’s to be expected, of course, given that TNK is now allowing its dividend to float, based on quarterly earnings, and given that they’ve acquired several new Suezmax class vessels for transporting crude oil, which, of course, cost money and interest. Nonetheless, this company still earned 29 cents per share this quarter after all that and its PE (price-earnings ratio) is a ridiculously low 2.8.
Anyhow, we keep getting bid lower, so maybe we’d best stop buying for awhile until the panic sellers clear out their inventory.
Aside from these positions, we continue to hold onto our mostly term-preferred stocks right now, perhaps looking to buy more, even though any real Fed interest rate move could drop them a bit. We’ve taken care to mostly hold preferreds that will be called in five years or less, so unless for some reason, Obama is acclaimed president for life, we don’t see much risk in holding these stocks in a negative environment. At least for now.
We also now have a small position in Apple (AAPL), which is up today, but not dramatically. Buffett may have put a floor under this stock’s price, so for now, we’ll continue to acquire a few shares here and there on price pullbacks. As with TNK, the punishing of AAPL is way overdone, and touchy investors will see that over the next two quarters, likely making them wish they’d been buying right here and now.
Have a good weekend, and we’ll see you on Monday.