WASHINGTON, July 19, 2016 – It’s another rather boring day in the stock market. New York markets have just rung the closing bell, with the Dow closing up around 26 points (+0.14 percent) matched by a more or less equal but opposite close on the S&P 500, which was off 3.11 points, which equals… -0.14 percent.
It was likely high time that the current central-bank fueled summer rally should at least take a pause today. But it’s also remarkable that many financial sites—most notably CNBC—seem to have been devoting most of their attention today to smearing Donald Trump and savaging his wife Melania for alleged “plagiarism” in her politely elegant speech last night. Is she running for office, by the way?
It was Rush Limbaugh, I think, who, many years ago, accurately re-named CNN as the “Clinton News Network.” The same might be said of CNN’s stable-mates in the NBC empire, which also includes that flagship network along with designated left-wing slime machine MSNBC and—at least this week—CNBC, normally a financial site of some repute but this week, or at least Monday and Tuesday, apparently dedicated more to trashing the Donald Trump campaign than to reporting real financial news.
At 4 p.m. EDT, here’s a roster of CNBC front web page headlines:
Top headline: “Guess where Trump is showing his liberal stripes again,” an article ridiculing Trump’s stated desire to re-impose Glass-Steagall, the depression-era banking law that kept the banking business out of other businesses like the ones that ruined the U.S. banking systems in the late 1920s and early 1930s.”
Repealing the last vestiges of Glass-Steagall in 1999 arguably led directly to the Great Recession from which we still haven’t recovered. I’ve favored precisely that move since the moment Glass-Steagall was tossed out the back door. And I’ve been right ever since. So what’s wrong with Trump’s position, aside from lowering the amount of top bankers’ bonus checks, which have remained at obscene levels right through the Great Recession and beyond.
Plus, think about it: CNBC’s card-carrying Democrats and left-wing sympathizers are trashing Trump for “showing his liberal stripes”? Wouldn’t that be a good thing for these idiots who always love “traditional American values” as long as they’re liberal? As Emerson once noted, “A foolish consistency is the hobgoblin of little minds.”
Other headlines: GOP senator: ‘I’m worried for our party’
Another John Harwood interview hatchet job, mischaracterizing the evenhanded opinions of West Virginia’s Republican senator Shelley Moore Capito. What, Sen. Capito would prefer Hillary Clinton and her Obama-like anti-coal policies which would continue the permanent ruination of this already struggling state? I don’t think so. A classic misleading headline.
More crap from the successor to “Journolist,” which, like much of the MSM and particularly the NBC pro-Hillary partisans has colluded on this obvious set-up job which was very likely initiated by a mole within the Trump entourage. Anyone remember Joe Biden’s wholesale theft of a Neil Kinnock speech when he was running for President. Is Melania Trump running for President. Pathetic. Democrat War on Women, too. It’s Soros-funded “Vox” that’s displaying the profound laziness here. But you knew that.
Of course. Pretty much ALL rock groups like to virtue-signal against Republicans and conservatives. These phony intellectuals continue to get much richer than their fans while habitually mouthing left-wing platitudes they never apply to in their own lives. Plus, regarding Queen, they’re Brits. WTF?
This is an interesting little sideshow, very likely part of the Murdoch family’s desire to oust Ailes in favor of trending political correctness. Lest we forget, Ailes made Fox News the powerhouse that it is today by running news and hosting shows and personalities that were quite the opposite of MSM propaganda. It was almost inevitable he’d pay the price some day. He may or may not be guilty of anything, but the Murdochs and America’s lefties would sure like to get rid of him, the better to eliminate Fox’s “fair and balanced” coverage and make it more like money-losing MSNBC.
Who the hell said Day 1 was a bust? Some bench-warming headline writing, college brainwashed intern who wanted to get noticed? So much for creative writing degrees.
Monday afternoon, the Trump-led establishment summarily dumped the dump-Trumpers who yelled and screamed at the outcome even as they themselves would have gleefully dumped the “people’s nominee” in a heart beat. The Establishment hates to lose and they get pretty huffy about it when it happens. (See also Al Gore and Election 2000.)
After giving us a pair of pathetic, losing candidates in 2008 and 2012, thus enabling Obama to destroy America as we knew and loved it, I’m not exactly sure why these allegedly “conservative” establishment dinosaurs deserve any respect at all. Meanwhile on Monday night, Milwaukee’s impressive top cop and former NYC mayor Rudy Giuliani gave a pair of the best convention speeches we’ve heard in a long time. It was swell pro-Republican meat and potatoes for the masses in all its juicy goodness.
Both speakers voiced their emphatic support for America’s cops and armed forces combatants the way all Americans should—and do unless they’re Democrats. A+ material. So how was this a “bust?” Because of the phony, pre-manufactured, dirty tricks, overhyped Melania Trump speech “scandal?” Seriously? Have they no decency?
With friends like this… I’ve defended “W” for years and still do. But this kind of nonsense is too little and too late. The Bush family simply assumed the dynasty could easily purchase another run. But the pro-Republican hoi polloi was long ago finished with the notion of dynasties a long time ago, and a statement like this one by a former President is just sour grapes. Little Bro Jeb sucked as a candidate and never got more than 4 percent support in the Republican primaries with his bland messaging designed by his overpaid team of pros to offend the least number of potential voters. What a wussy way to win. Republican primary voters saw right through it.
Jeb’s 4 percent support would have been pretty much the same even without a Trump candidacy. Voters this year are in a high dudgeon, and “wimpy” is not among their most desired traits in a Presidential candidate, particularly after McCain and Romney (another sore-loser, entitled idiot who flamed out. Again.)
In the end, “W” and family are just pissed. Really, there’s no elegant way to put this. It’s, like, Omigod, the end of noblesse oblige, totally. Plus, following in the footsteps of other old guard Republican Losers-for-Life, the Bush family stayed home from the convention, just like increasingly bizarre Ohio Governor John Kasich. Last year, Kasich likely lobbied for the Cleveland convention imagining that he would be his state’s “favorite son” and the GOP’s Presidential nominee. Instead, he’s in Columbus tonight, pouting and sulking and still wondering why it was he won the fight to dump mandatory public employee union dues before he lost it.
All this is a likely plus for Trump, given that the Dems continue to blame everything that’s wrong with the world on GW Bush and the rest of those proven Republican scoundrels. For the truly wealthy in this country on both sides of the aisle, the greatest crime occurs when they don’t get their own way. It’s even worse when they can’t win against someone they’d never invite to join their country club. Give it up, guys. Time’s up.
As you can see, the Clintons’ and the Democrats’ government-owned media combine’s attention-shifting slime machine is crowding out even business headlines today even as it tries to neutralize a potential Trump boost from a successful GOP convention. Hence, today’s flat, unenthusiastic markets. The irritating thing is that the pathetic losers of the GOP establishment are actually doing their level best to help the lefties out, the better, I guess, to lose the Supreme Court for a generation at least and the country along with it. There’s real intelligence for you.
It’s all part and parcel, in the end, of why a tectonic political shift is occurring in not one but both political parties—lest we forget about all those embittered Bernie Sanders supporters out there who no longer “feel the Bern.” The vast majority of American voters actually now favor “none-of-the-above” when it comes to our two political parties. The very power of the Trump and Sanders candidacies offers amble evidence for this reality.
The Democrats’ far-more-ruthless and disciplined machine ultimately squashed Sanders like a bug. On the other hand, Trump, unconstrained by the Republican Establishment’s recent track record nominating pathetic, losing candidates—bland politicians who wouldn’t risk bloody knuckles by fighting the Democrats’ legions of brown shirt bullies—steamrollered over his arguably more articulate and better-qualified competitors. That’s why a vast and genuinely “big tent” of voters continues to support him.
As this battle continues to play out, it will be interesting to see how it concludes, both for American business and for what’s left of American democracy and institutions. How stocks and bonds move for the rest of the year will almost without a doubt track right along with the zeitgeist, perhaps giving us the best indication yet as to how furious average Americans are as well as which candidate is likely to win.
In the meantime, all MSM headlines, like CNBC’s pathetic dross above, should be suspect. The media wants a landslide victory for Crooked Hillary so they can continue to goof off and get high paychecks while lamenting the fate of “the poor.” We suspect that if they get their wish, or look like they will, the market itself will look far less rosy as the first Tuesday in November approaches.
Nothing much again today. We dumped a modest position in one of our 3 management company/venture capitalist firms, Carlyle (symbol: CG). We took a tiny profit in the trade, but figured we’d get out when the stock took a modest hit from new reporting a potentially gigantic lawsuit.
As we still hold shares in the other two, Blackstone (BX) and KKR (KKR), we figured we’d lighten up by getting rid of CG at least for now, as it’s consistently been the weakest of these competing firms—though we might get back in if things turn around.
Reluctantly, we pared a small number of shares from our fairly large position in Teekay Tankers (TNK). Short interest has begun to creep up, even as this stock is struggling to recover from its big first-half hit. With an already high level of short interest, it will take an awfully positive quarter, or maybe two of them, to get a massive and profitable short squeeze underway. If the current quarters’ earnings are off estimates by even half a cent, this stock could sink below a dollar at the rate it’s going as the shorts hit it again and again, so we’re reluctantly lightening up little by little in case that happens. Our portfolios aren’t monstrously huge, and we’d like to avoid a hit like that. The company itself could help. We think it’s doing well, if not great. But how they manage their books and rates remains a general mystery. And in this market, which, unlike the Obama Administrations, actually does value transparency, poorly communicated policies, strategies and numbers are often reasons to head for the exist.
On the other hand, we did manage to obtain a small number of Ashford Hospitality 7.375 percent preferred shares during the shares’ apparent migration from the hard to trade Gray Market to the shares’ official listing on the NYSE, which may have occurred today under the new symbol AHT/PRF. If these shares drop lower, below par value ($25), we may pick up another 100 or 200 shares.
This issue is apparently the successor to Ashford’s 9 percent preferred issue (AHT/PRE) which we own but which the company has just “called.” That means they’re buying back their shares from us and retiring that issue at the end of the first week of August, paying us back par value ($25 per share), above where we picked those shares up, giving us a nice capital gain.
Furthermore, they’re paying out a partial dividend in the process, plus adding a small bonus applied to each share, sort of a consolation prize, we guess for losing that awesome yield. So we’re now replacing these soon-to-be-called shares just slightly in advance with those new AHT/PRF shares. The underlying company, Ashford Hospitality (AHT), is not exactly the best-managed, best run affair in today’s markets. But in an environment where yields are headed straight for zero and below, we’ll take it for now, particularly in light of losing that fat dividend on Ashford’s soon-to-be-retired E preferred shares.
Finally, we’ve signed up for an IPO-like secondary issue of NCI Building Systems (NCS) and a genuine IPO issue of Patheon (PTHN), a substantial and largely profitable Netherlands-based company with a long history that manufactures, by contract, pills, capsules and other versions of major medications for many of the world’s biggest pharmaceutical companies.
In a secondary issue, BTW—generally not as exciting or entertaining as a real IPO—an already existing publicly traded company chooses, for various reasons, to sell more shares to the general public. These can be iffy, and the Maven has been batting about 50-50 on secondaries over many years, finding better odds can be had with carefully selected IPOs. In the case of the NCS secondary, a batch of insiders are selling a lot of stock and the company will receive none of the proceeds. That said, NCS will simultaneously be buying a lot of these investors’ shares back themselves and taking them off the books as part of their long-term stock buyout campaign. So at least this transaction looks like it’s mostly non-dilutive to earnings. (We hope.)
NCS will price tonight, and PTHN will price tomorrow night, with each stock opening the following day. We’ll decide to see if we’ll go ahead with either offer after we see just where each one prices. You look to get a bounce on these stocks, so if they’re overpriced, we’re out. On the other hand, with our discount brokerage firm, we effectively can’t flip these shares if they “pop,” but instead, need to hold them for 31 days. For that reason, we also have to determine just how likely each stock is to hold any “pop” it might get when the shares open for trade.
We’ll let you know how things go with both issues when they happen. But also remember, just because we decide to give our brokerage firm a “go” on buying these stocks for our accounts, there’s no guarantee we’ll get any shares. If big investors and institutions want a lot of shares of a given offering, they’ll get pulled from us and we won’t get any. Unfair? Yeah, I think so. But that’s how it worked when the Maven was in the business, and it’s not likely to change any time soon.
The really hot IPO issues are used as “gifts” for wealthy clients who subsequently trade them on the “pop” (should one occur). The rest of us, as usual, can have whatever is left, if any. If not, tough cookies. It’s another way the rich get richer. Just thought you’d like to know.
* Cartoon by Branco, reproduced her by arrangement and with permission from LegalInsurrection.