Stocks tread water, digesting Yellen, Iran, Greece situations

Markets up, then down Wednesday as investors assess more political and economic outputs than they can handle in a single day. Saudis irritated over Iran.

Saudi anti-Iranian cartoon.
Saudi newspaper Al-Watan published a cartoon Wednesday lashing out at the sham U.S.-Iran agreement. The cartoon depicts Iran's Supreme Leader Ayatollah Ali Khamenei force-feeding new Iranian oil money into the gaping mouth of an eager and presumably Iran-backed anti-Saudi terrorist. (Hat tip: The DC and Al Watan)

WASHINGTON, July 15, 2015 – As President Obama takes his victory lap holds a rare press conference this afternoon to crow about discuss his capitulation to historic agreement with the radical imams running the Islamic Republic of Iran, the financial world is still trying to digest what’s ultimately going to unfold in Greece—and whether it will affect investments; and if so, which ones.

Earlier today in her Humphrey-Hawkins testimony before the House, Janet Yellen once again not-so-adroitly sidestepped a straightforward explanation as to why she and the Fed were continuing to resolutely stonewall Congressional inquiries regarding premature and damaging news leaks from the Fed’s inner sanctum, generating very real hostility on the Republican-led Hill.

It seems that most if not all appointees and centers of influence in this most transparent executive branch in the history of the known universe is actually history’s most opaque. But, though most sentient beings have actually recognized this for the better part of the past seven years, what’s left of the press blithely ignores this administration’s Constitutional transgressions, while the administration’s opponents haven’t the first clue as to how they might restore the American Republic.

Center stage, though, is the Iran deal, which essentially gives the mad mullahs everything they always intended to grab anyway. They’ll now be able to manufacture and deploy the nuclear weapons they always intended to manufacture and deploy, they’ll be enriched by finally getting hold of at least $1 billion of impounded funds—the better to invest in more terrorist plots—and they’ll soon be able to cut deals to open their rich oil fields once again for production.

The Arab world (remember: the Iranians are Persians), particularly the Sunni Arabs, are quietly or not-so-quietly freaking out over this virtually unforeseeable U.S. capitulation to a hostile regime that’s arguably more hostile to American interests than any currently Sunni-led entity, and the upshot will likely be nuclear proliferation in the Middle East. But what did we expect?

The Saudis, in particular, are in a high dudgeon today, and likely agree with our assessment of the situation. According to The DC,

“Saudi newspaper Al-Watan published a cartoon Wednesday [reproduced above] suggesting Iran will use sanctions relief from the nuclear deal to pump money into terrorism.

“‘The cartoon depicts Iranian Supreme Leader Ayatollah Ali Khamenei turning the dial on a pipe labeled “nuclear agreement.’ Money, marked with the U.S. dollar sign, funnels into the mouth of a dark-clad figure labeled ‘terrorism.’”

This U.S.-Iran deal that’s no deal embodies “fundamental transformation” for sure and virtual guarantees that something like the Cuban Missile Crisis will now happen sooner rather than later. That’s not a very comforting thought. But aside from a few concerned Congressmen and Senators, the Gang of Morons from both sides of the aisle currently in charge of official Washington could care less. They to go about, doing their best to stifle Constitutional freedoms shrinking workers’ paychecks (to enrich their 1% patrons) and ban words, symbols, and freedom of choice at a torrid pace.

Meanwhile, in the real world, oil and oil stocks are pulling back today, a direct consequence of the Iran “deal.” It’s feared that the Iranians will soon be pumping oil as fast as Cleveland and Toledo pump water out of Lake Erie, adding to the world’s oil glut and dropping prices further, putting U.S. frackers out of business for good, maybe even tomorrow. BTW, trivia question: Whatever happened to “peak oil?”

Markets have been trying to levitate all day, but with little conviction. The last two days’ rally suddenly has stocks approaching an oversold situation, so we’re already ripe for a pullback, which, at 3 p.m. EDT seems to have gotten underway.

UPDATE: As many have been predicting, Greek citizens have begun to riot in Athens ahead of an uncertain vote in Parliament on the Eurozone’s latest bailout plan.

Investors are simply getting exhausted with this 2015 market, whipsawed as it has been by bizarre and unexpected domestic and international politics. Back in the day, Irish poet William Butler Yeats worried that in his chaotic, almost post-Colonial country, “the center” would not “hold.”

The center is already busted here in the U.S. The political consequences remain uncertain but are highly unlikely to be positive. The economic consequences are already disastrous and are getting worse, except for those ever-wealthier oligarchs who are running the whole show now for their exclusive benefit.

Today’s trading tips

Once again, a gutsy longer-term bet is investing incrementally in regional bank stocks which should begin to strengthen as interest rates are gradually driven up, either by a reluctant Fed, or, as is currently the case, by the bond vigilantes who have finally given up on waiting.

As interest rates start sneaking up, traditional banking business will become more and more positive with regard to the bottom line. Banks’ historically higher-than-average dividend payouts will gradually increase. And all will be right with the world, assuming we still have one.

Bank stocks we like continue to be Keycorp (symbol: KEY), First Niagara (FNFG), New York Community Bank (NYCB), Huntington (HBAN). BB&T (BBT) and Zions (ZION) would be nice to grab as well, but they’re a little pricey right now. Maybe on a big down day. Ohio’s Fifth Third (FITB) has had a bad patch this year, but will likely right itself by 2016. So that stock also bears watching.

In addition to the banks, REITs have had the living daylights beaten out of them. Attractive REITs right now would include our top favorite, Two Harbors (TWO) and currently beleaguered but quite profitable Pennymac (PMT), the latter of which continues to make plenty of money out of buying and holding substandard mortgages.

Both REITs are also buttressing themselves against wobbly markets by getting into the loan servicing business, a big plus in our estimation.

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Terry Ponick
Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17