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Tariff fears? Italian issues? US jobs up, so stock market reverses. Again

Written By | Jun 1, 2018
tariff fears and Italian issues

Boothbay Harbor, Maine. Scene of location shots for the 1956 film version of Rodgers’ and Hammerstein’s “Carousel.” (Via Wikipedia entry on “Carousel,” CC 3.0, GNU 1.2 licenses)

tariff fears and Italian issues

Theatrical poster for 1956 film version of Rodgers’ and Hammerstein’s “Carousel.” Likely copyright 20th Century Fox. Permissible lo-res version for educational purposes.

WASHINGTON, June 1, 2018. Are you tormented by tariff fears or have Italian issues got you down? Forget about ‘em. U.S. job numbers are up Friday morning and Wall Street traders and investors are bursting into song Friday morning. Big time.

In addition singing our old favorite, “What a difference a day makes,” we’re hearing strains of another popular song this morning, this one from Rodgers’ and Hammerstein’s “Carousel.

June is bustin’ out all over
All over the meadow and the hill!
Buds’re bustin’ outa bushes
And the rompin’ river pushes
Ev’ry little wheel that wheels beside the mill!

Throughout this post-Memorial Day trading week, stock market mavens have alternated gloom and doom with irrational exuberance. On down days, the Grim Reaper stalks trading desks, warning professional traders and investors alike that tariff fears and Italian issues mean “We’re all gonna die!”




tariff fears and Italian issues

Theatrical poster for 1956 film version of Rodgers’ and Hammerstein’s “The King and I.” Likely copyright 20th Century Fox. Permissible lo-res version for educational purposes.

Yet each following morning, Rodgers and Hammerstein return to counter with “The King and I’s” “I Whistle a Happy Tune.”

Whenever I feel afraid
I hold my head erect
And whistle a happy tune
So no one will suspect
I’m afraid.

Tunes and lyrics from the American songbook are one way you can retain enough sanity to get through a bi-polar trading week like this one. Down 400, up 300 – it’s almost like the Dow Jones Industrials are following a bouncing ball. This purely headline- and rumor-driven trading pattern has been frustrating to serious investors.

Blessedly, we’re heading for a weekend off from this frantic action. But even so, fresh terrors loom. After all, what if some other earth-shattering surprise headline, juicy political rumor or even-viler anti-Trump obscenity voiced by a D-List “comic” suddenly bursts forth in the Twitterverse or elsewhere? On a day you can’t trade, no less.

Anyway, let’s enjoy this (thus far) positive Friday for stocks while we can. CNBC tells us this morning’s market jubilation is based on Friday’s “stronger-than-expected” job report. The government employment numbers

“… pushed stocks higher on Friday as Wall Street recovered some of the losses seen in the previous session.

“The Dow Jones industrial average rose 204 points, with J.P. Morgan Chase as the best-performing stock in the index. The S&P 500 gained 0.8 percent as financials rose more than 1 percent. The Nasdaq composite advanced 0.8 percent.

“The U.S. economy added 223,000 jobs in May, while economists polled by Reuters expected a gain of 188,000. Average hourly earnings, meanwhile, rose 0.3 percent last month while the unemployment rate ticked down to 3.8 percent.

“‘Today’s jobs numbers pack a wallop,’ said Mike Loewengart, vice president of investment strategy. But ‘with significant year-over-year wage gains, the inflation fears of February could pick up steam again, which could bring a chorus of Fed hawks squawking for more rate hikes.’

“‘These numbers could serve as a wake-up call that our economy is hustling despite geopolitics, but that could also bring added volatility as market participants adjust their expectations for increased Fed action,’ he said.



But CNBC also added the mandatory negative spin.

“Expectations for a rate hike in December ticked up following the report’s release, according to the CME Group’s FedWatch tool.”

Be afraid. Be VERY afraid.

Tiresome.

At any rate, the Dow is slightly higher (+ 219.03, nearly + 1 percent) as we write this, while the S&P 500 and the NASDAQ are up by roughly the same percentage. So June is really bustin’ out all over, at least as of 10:30 a.m. ET. We should enjoy this. But we should also prepare ourselves for spending Monday in an alternate, negative trading universe. Tariff fears and Italian issues will likely recur on a regular basis throughout the summer.

On the European front, while no one is mentioning this, an additional reason for Friday’s current market happiness might be that those crazy Italians executed another escape from their current governmental brinksmanship by somehow cobbling together the right combination of ministers. This will apparently allow the current and highly weird leftist-rightist coalition that won that country’s March elections to take power without causing another pop election campaign.

We’ll see how long this lasts. Most post-WWII Italian governments seem to have about a 24-hour half-life, but you never know.

The governmental problem over there resembles the problem we have over here. A prosperous Italy run by northern big-city oligarchs and elites tends to run the country for its benefit while crapping on the rest of the country, which is significantly less well-off. So the rest of the country – the Italian Deplorables – finally rose up and revolted against those wealthy Deep Staters, leading to panic and consternation among the latter.

Their soft-coup attempt against the Italian populists has been partially halted, at least for the moment. But you never know. The leader of Italy’s right-wing coalition faction is an unabashed fan of – Donald Trump. Apparently no one over there saw that one coming either. Tariff fears are they least of their worries. The biggest of those Italian issues is the possibility that the populists may want out of the Euro. An Italexit? Don’t miss the next thrilling, market battering episode.

But for now, this latest economic terror is suspended, TBD at a later date.

Getting beyond tariff fears and Italian issues

One bit of good news for our rather battered large portfolio began to surface Tuesday, despite the sheer weirdness of this trading week. The small position we established by actually getting shares of payment and management technology company GreenSky (symbol: GSKY) in last week’s dud IPO have actually been gaining nicely this week despite the market’s ups and downs.

Our track record lately in getting hold of any shares in 2018’s short list of hot technology-based IPOs has been close to zero. So when we did get shares of GreenSky, we braced for the worst. It must, therefore, be a dog, even though this is a rare, techy IPO that actually makes money.

That said, the May 24 IPO itself stunk up the place, barely hovering around breakeven on its first trading day and spending most of that day significantly down from its offering price of $23 per share.

However, GSKY shares currently trade at $26.80, a 16.5 percent gain in just a few days.

“What a difference a day makes.”

Have a good weekend.

— Headline Photo: Boothbay Harbor, Maine. Scene of location shots for the 1956 film version of Rodgers’ and Hammerstein’s “Carousel.” (Via Wikipedia entry on “Carousel,” CC 3.0, GNU 1.2 licenses)

 

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 Senior 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