WASHINGTON. It’s yo-yo investing time once again as we close out another bizarre Wall Street week. Thursday stocks popped on kinda, sorta good trade news out of China – likely a smokescreen, but, whatever. But then that rally partially fizzled. Stocks closed modestly on the upside. But this morning — options-expiration Friday — all three major average are trying to regain sprint mode.
Yo-yo investing, Summer 2019 edition
As we approach 11 a.m. ET, it’s nice to see many charts moving into the green zone rather than nearly all charts getting firmly mired in deep red mud.
But who knows where this week’s yo-yo investing pattern will turn next week? Right now, it’s a roll of the dice.
Tim McPartland opines
Aside from the distortions involved on option expiration Fridays, what’s driving Friday morning’s burst of optimism? Innovative Income Investor guru Tim McPartland has a scorecard, listing what’s driving this Friday morning rally.
“While we have seen wild recession fears the last couple of days this morning the U.S data releases have been strong.
“This morning retail sales were released at up .7%—against a forecast of up.3%. Taking out autos sales were up 1% against a .2% forecast.
“The Philly Fed manufacturing index was at 16.8 against a forecast of 10, while the New York empire state manufacturing index was at 4.8 against a forecast of 3…
“After the release of this data the 30 year treasury popped back over 2% after falling below 2% for the first time in history.”
But all isn’t coming up roses
But Tim concludes with an important cautionary note.
“While the above may serve to sooth the markets for now we know that if we get a number of days like yesterday where the DJIA plunges it will be trumpeted across the news continually–consumer confidence can be shattered as they look at their 40lK statements and recession can become a self fulfilling prophecy. We need to watch consumer confidence numbers in the months ahead.”
The italics here are mine. They underscore a point I’ve been developing since early July. Isn’t it funny that as the Trump-Russia Collusion hoax finally blew up for the phony fairy tale it was, leftists in the House of Representatives immediately seized upon the Mueller Report’s partisan gift – the non-charge of obstruction of justice allegation – to fire up impeachment fervor once more.
Meanwhile, on the banking, finance and business front, since about mid-July, one powerful but heretofore concealed #Resistance team has stepped out of the shadows to attack the Trump presidency where it could get hurt: Trump’s stellar economy. Our current yo-yo investing climate offers major support for this observation.
Gloom and Doom scenarios abound
Every day, we’re treated to a frenzy of doom-and-gloom recession scenarios in the financial media and elsewhere, driving the US down the path to an absolutely guaranteed 2020 Great Recession II. Just in time, BTW, to derail Trump’s re-election drive. This is a major cause behind our current yo-yo investing pattern. Just a coincidence, right?
As the failure of the Mueller Report and the slow-rolling impeachment drumbeat seem to be telling us, the only way America’s hard-core leftists in government, business and the media can bring Trump down is to beat the recession drum long enough and loud enough that the incessant message becomes a self-fulfilling prophecy.
CNBC’s Jim Cramer actually confirms my thesis about today’s recession mongers
CNBC’s investment wild man Jim Cramer weighed in on this fake recession scheme Thursday on NBC’s Today Show. We discovered Cramer’s remarks not via NBC but via online conservative news voice NewsBusters. Kyle Drennan post outlined Cramer’s investment thesis.
Drennan begins by highlighting the hysteria of Cramer’s Today Show co-hosts. (Bold text via NewsBusters.)
“‘This morning, nerves are frayed on Wall Street in the wake of the Dow’s worst day of the year, a loss of 800 points. The markets shaken by fears of worldwide economic trouble,’ co-host Craig Melvin warned as he introduced a report hyping a possible downturn. Correspondent Peter Alexander sneered: ‘This morning, President Trump is arguing that the economy remains strong despite new concerns that it is actual weakening and a loud signal that a recession could be on the horizon.'”
“The reporter eagerly pushed more alarmist rhetoric:
“‘…with stocks plunging in one of their worst days all year, fears of a recession are rising. The major stock sell-off following a sounding of the alarms on Wall Street. The flashing red warning sign, a key economic indicator that’s proceeded every recession since 1956…’
“Following the doom and gloom, co-host Savannah Guthrie turned to Cramer and worried: ‘So how significant is this? I mean, it’s the worst single-day drop this year, all the key markets are down. I mean, what does it mean?’
More Today Show flapdoodle
What the heck, Savannah? “I mean, what does it mean?” Seriously? Guthrie clearly hasn’t a clue what she’s talking about as she flounders about. But Cramer won’t give her the #NeverTrump answer she’s wants.
“Cramer immediately dispelled attempts to stoke panic.
“‘Well, I think we need to dial back the hysteria first. The markets are up huge….so let’s kind of be a little more cool. There a many people who I think are sowing panic. That’s not necessary. This does not have to end poorly, we can avoid a recession.’
“Guthrie pointed to the brief inverted yield curve that occurred on Wednesday morning… ‘Does that mean a recession is certainly going to happen?’ Cramer replied: ‘I’m so glad you asked that way because the answer is no. I think that it raises the possibility…that there are people who can sow fear....I really don’t want to be someone who is taking the ill-advised position that it must end in recession.’
Cramer hearts Trump on Federal Reserve
“[And Cramer] actually agreed completely with the President’s criticism of the Federal Reserve:
“‘Oh, the Fed has to cut again… The Federal Reserve got what we call too tight… Jay Powell’s been a little intransigent… and he hasn’t done what’s necessary.’
“‘I think most people should recognize, things are not as horrible as… the media is making it out to be.’”
Cramer is referencing the same silent conspiracy I’ve already noted. Just more diplomatically. After all, he essentailly works for NBC.
A video of the interview.
Here’s a sampling of this morning’s CNBC online headlines.
- Fed may not have enough firepower to prevent a recession
- Rubenstein: Trump must cut some kind of China trade deal or risk being a one-term president
- A leading indicator could be waving a yellow flag to the markets
- Ray Dalio says he wouldn’t Rule out China weaponizing its massive US Treasure holdings
- US consumer sentiment for August comes in well below estimates
- Worried about a recession? Where to pick up the best returns outside of the stock market
If the media keeps trumpeting these scary but mostly conjectural headlines, it will continue to scare investors out of the market.
A yo-yo investing environment can gradually drive stocks down hard enough to hurt the economy and lead to the edge of a real recession.
Washington’s entrenched socialists and Deep Staters have twice failed to unseat President Trump. By egging on a recession, perhaps they think the third time’s the charm.
–Headline image: PR image, Zombie yo-yo, via Amazon.com.