WASHINGTON, January 17, 2017 – We really do try to write a financial column in this space. But throughout the Obama Administration’s long, leftist march through the American government and American policy, adversarial politics and artificially low interest rates have consistently influenced investment decisions in nearly every way.
Once upon a time, you could evaluate potential stock investments based on researching earnings and fundamentals—fundamental analysis. Or you could evaluate the price motion and patterns of a given stock by looking at its price and volume charts, potentially providing clues as to where that stock might me moving in the short or intermediate term future—technical analysis or “charting.”
But for the past eight years, politics, plus the distorting effect of high-frequency trading algorithms—by which computers buy or sell stocks in rapid sequences based not on price, earnings or chart patterns but based on daily headlines—has made for crazy, often irrational gyrations in markets.
Given the influence of pure politics, low-to-nonexistent interest rates and headline driven high-frequency trading on markets, traders, investors and large financial firms alike have often resorted to trading broadly sector- or index-based ETFs to get a reasonable return. In the meantime, even the most fabled stock pickers on Wall Street found their previously useful analytical tools—fundamental and technical analysis—were leading them to underperform the indexes, sometimes drastically so.
There have been some signs this static paradigm may be reverting in a way that could cause stock-pickers to gain favor with investors once again. But that welcome move back to rationality may have to wait for at least one more week as the outgoing Obama Administration and its longtime media lackeys busily hide political land mines throughout Washington, D.C., just waiting for the new Trump team to step on them and blow themselves up, politically at least.
Markets have been thrashing since the beginning of January, looking forward on one hand to the accession of a genuine capitalist to the U.S. Presidency. On the other hand, goaded by the left-wing Democrat operatives who own and operate the biggest U.S. media outlets, prognosticators and investors alike read nothing but negative predictions of gloom and doom in the days, months and years ahead because America’s silent majority arose in 2016 to vote against their own best interests. Or at least that’s the preferred narrative.
As a result, investors haven’t been doing much buying or selling of stocks and bonds, at least since the Christmas-New Year’s break, worried to death that any move they might make would be the wrong move. Things are just too uncertain. And, unfortunately, our incoming President seems to be making this uncertainty worse, or at least so the narrative tells us, by indiscriminately firing shots over the bows of American businesses, American politicians and foreign governments alike.
The media that reports this stuff, unfortunately, is not familiar with “The Art of the Deal,” since even those who cite it have never read it. Trump is a master of starting any negotiation by voicing sometimes frighteningly extreme pronouncements. Working toward the center from these typically outrageous positions is almost always likely to result in some kind of deal that tilts more your way than it might have if you’d started the negotiations with a more reasonable position. Every businessman knows this. The media and official Washington, apparently, do not.
CNBC takes briefly explores this phenomenon today, attempting to make sense out of the current, wobbly market conditions:
“‘It’s not about proposals anymore … but what are they going to do,’ said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management. ‘I think investors are at a pause trying to figure out what’s next.’ He also said he is positive about U.S. equities, noting underlying global economic growth has been overlooked.”
But on the other hand, another CNBC piece succumbs to the usual cheerleading that’s supported the pitiful Obamanomic moves of the last 8 years, particularly with regard to the likelihood that Obamacare will be either altered or repealed in some way, shape or form. The network’s Internet site posts a ridiculously partisan piece based on Congressional Budget Office (CBO) estimates that are completely bogus, given that no Obamacare replacement proposal has yet been passed.
“Repealing portions of Obamacare would lead to 32 million more people becoming uninsured by 2026, and a doubling in the prices of premiums paid by those people who remain covered by individual health plans by that year, a new analysis says.
“The Congressional Budget Office report projects that ‘the number of people who are uninsured would increase by 18 million in the first new plan year following enactment’ of an Obamacare repeal bill along the lines of one that had been introduced in the House in 2015.
“The report projects millions more people would leave the individual insurance market after that as prices skyrocket. Eventually, about three-quarters of the U.S. population would not even have access to an insurer selling such individual plans if the House bill were to be adopted, according to the nonpartisan CBO.”
Seriously? “Nonpartisan CBO” my a_ _, if you’ll forgiven my colloquial French. Like purely theory-based
global warming climate change stats, the CBO’s “projections” take into account only conjecture based on past proposals as opposed to anything real.
The CBO actually used to be nonpartisan. But like everything else in Washington, it’s been thoroughly politicized by the Democrats, so you can’t rely on many of its theory-based projections these days. Back in the day, the military used to regard pronouncements like the CBO’s nonsensical verbiage as “mushroom treatment”: Being kept in the dark and fed horse_ _ _ t.
Until we can find a way out of the Washington mushroom house and figure out which way the economic winds are blowing, it’s going to be tough to come up with useful financial columns this week. For that reason, we anticipate our columns will be brief this week until something concrete actually happens.