WASHINGTON –I’m weighing in this morning with a (hopefully) short column on what promises to be a chaotic week for US stocks and bonds. This week we’ll be swamped with both as the Democrats’ Impeachment-gate kabuki gets more intense and silly and as US negotiations on China trade roadblocks get underway. That means, buckle-up, stock fans. Rough road ahead.
US stocks now almost wholly headline driven
As I’ve noted many, many times before in these columns, the US stocks are no longer moored to traditional investment strategies. I.e.:
- Fundamental analysis, essentially based on earnings, book value and PE ratios; and
- technical analysis, which is based on historical chart patterns as a predictive tool.
Today, trading and investing in US stocks is driven by algorithmically driven high-speed computers and breaking news headline input. It has little if anything to do with traditional stock valuation methods.
Given the coming week, which promises to inundate us with mostly fake news and straightforward partisan opinion – and headlines – markets could get wild. For starters, US stocks opened Monday with their usual tendency to sink into the red-ink zone on the first day of the trading week.
The non-Democratic left’s Impeachment-gate kabuki theater, brought to you by the Deep State
Today’s predictable morning mess is based in part on the current chapter of the ongoing Trump Impeachment-gate charade. Poor-loser Democrats have had their knickers in a tight knot from the moment Trump won Election 2016. Now entirely owned by the Dark Side, this unconstitutional mess invented by certifiably insane Marxist Democrat / Deep State coup – aka, Impeachment-gate – is something only those living inside the Beltway (like yours truly) can even begin to understand.
It promises to get worse. And Mr Market doesn’t like it at all. Not because he’s a card-carrying member of the GOP. But because he prefers certainty and normalcy, both of which are currently in very short supply in The Swamp.
Traders and investors alike, again no matter what their political persuasion, generally like President Trump’s demonstrably pro-business, pro-US investment and trade policies even though Wall Street itself didn’t provide him much support in Election 2016.
But now, any sentient trader or investor realizes that the potential Impeachment-gate toppling of Trump by the crazed Stalinists and Maoists running the House of Representatives could not only damage their businesses. Far worse, a triumph by the Dark Side could destroy their wealth – and ours – as we know it.
Democrat insanity: For them, it’s not a bug. It’s a feature.
Worse, they fully understand that the Democrats’ absolute, unswerving dedication to hamstringing this pro-business administration without letup via endless legal wrangling of dubious legality will weaken Trump in international trade negotiations and possibly send the entire country into a recession, taking US stocks along with this plunge.
That’s not a bug but a feature for the Democrats. It’s item A on their political power-play menu. They hate a resurgent middle class and want to set the clock back to the era of Barack Obama, which nearly turned 95% of all Americans into miserable, impoverished Deplorables.
None of this frantic Impeachment-gate fakery is good for business. The uncertainty makes it difficult to plan. And so the lack of bold, new innovations and investments by the newly revived American business sector could steer us back into a recession. Just in time for Election 2020, wouldn’t you know. The Dems and their Deep State pals apparently figure, based on US election history, that if they can’t depose Trump in an outright, lie-based coup, they’ll knock him off at the ballot box via a nasty recession. That, of course, will “prove” that Trump’s economic policies were wrong all along.
Item B: Upcoming China trade negotiations. Stalled again by political jack-assery?
But Mr Market also faces item B on the power-play menu: The US / China trade negotiations. Long-stalled – likely by the never-ending “constitutional crisis” invented by the Democrats and their overly clever and completely cynical Lawfare buddies – these negotiations at one time might have had a fair chance at nailing down at least some kind of interim agreement between the two countries. But with Trump constantly hobbled, defending himself against bogus, false and likely seditious accusations, the Chi-coms will likely stall the negotiations again. And US stocks will swoon again.
And why shouldn’t they? If they can help the left-wing Democrats (i.e., their fellow travelers) defeat Trump next November, they can count (they think) on another creampuff fake leftist president like Obama to give in on what they’re really fighting in these negotiations: A verifiable end to China’s decades-long wholesale theft of American technology and innovation. That’s what they really won’t give up. And the Dems, I think, have just about secured that goal for Beijing by making Trump look to be a goner. At least to the Chinese, who probably believe what they see on CNN.
Michael Every seconds the motion
Doubt what I’m opining? Here’s a lot more from Rabobank’s Michael Every, via his posting at ZeroHedge. (Bold text, as usual, via ZH.)
“… perhaps the most important headline today is Bloomberg reporting that Chinese trade negotiators arriving in the US this week are apparently showing reticence to address any of the structural causes of China’s trade surplus (i.e., subsidies and non-tariff barriers, etc.) because they feel Trump is weakened and hence desperate for a deal. There should be no surprise on the Chinese refusal to address its structural economic model: that is something I have reiterated would be the case time and again, and is the key reason why we do not expect a real deal to be done. So no change there.
“However, regrettably this again underlines that Beijing is about to make another epic miscalculation if so. As noted, Trump ALWAYS escalates when put under pressure, and has never shown anything so far but a tendency to raise tariffs when disappointed. Recall that there were reports his first instinct when China walked away from trade talks back in May was to double the 25% tariffs to 50%, before opting to move to 30% instead. If China thinks Trump is going to crumble now just because he faces possible impeachment, they are about to get a very nasty surprise – and hence so are markets. “
US stocks could face at least two nasty political items this week
All this could create another nasty outcome for US stocks. Red ink could get set in motion by the worst political nonsense we’ve ever seen in this country. Namely, a full-scale effort by a once-traditional American political party to destroy our economy. Not to mention destroying the livelihoods of most, if not nearly all working Americans. The goal: the left could gain complete control of an anti-American, globalist, Deep State combine. America could end up with a permanent, unrepresentative government unified to repress any and all dissent.
What they’ll get, of course, is Civil War II, which in may ways has already started. That will, of course, be good for no one.
America’s psychopathic Democrats, and the unintended consequences of their blinding rage continue to stall markets this week. Add the dubious outcome for the US on the China trade front. And this tag team could succeed in tanking US stocks and markets in general in the coming months.
All could end well, of course, if the good guys actually win this Impeachment-gate battle. But they’re grossly outnumbered on all fronts at this point. So we, and investors in general, need to start planning for this ruinous outcome.
Meanwhile, Monday Wall Street action started out negative. Then it turned briefly positive. Traders were temporarily soothed by Larry Kudlow’s usually positive comments on the China trade negotiations. Stay tuned.
– Headline image: “Wizards of Sleaze.”Cartoon by Branco. My subtitle? “Pay no attention to those crooks behind the curtain.” Reproduced with permission and by arrangement with Legal Insurrection.*