Stocks taking October in stride while whistling past the grave yard

As the first week of October slips by, global stock trading show no signs of whistling past the grave yard.

Daily records in the US have become an inside joke in newsrooms. Continue reading

Advertisements

The health of Americans is tied to the US economy

As I wrote yesterday, the Trump/Russia fiasco is sucking all the oxygen out of the room, causing a political standstill in DC, which is benefiting markets and hurting the average American.

While the markets see there is little cause for panic of having a Trump impeachment, the circus is keeping any new regulations or even filling in new Trump Administration appointments from moving forward, keeping the volatility index near single digit levels.

Unfortunately, the US economy cannot run on its own during this “do-nothing” time. Looking at projections for the Q2 GDP, you will see how growth is falling off the table.

The Atlanta Fed’s GDPNow monitor started the quarter with a 4.3% growth projection in early May. It’s current measure of GDP is down to 2.5%, which is in the center of Wall St.’s consensus. The low on the Street consensus is 2.2% and falling.

So as the straw-man focus on Russian involvement in the election continues, the economy suffers, while the investment classes pull in more profits from their scare-free capital deployments.

This environment does little for the typical Trump supporter who is suffering in perhaps two part-time jobs, with no benefits. Remember this as well, these people have been suffering for as long as a decade in this situation.

How long can the family accept this stress and suffer in near-poverty before they breakdown? The suffering can be shown with the growing number of divorces and separations, but it also shows up in illnesses as diet gets worse due to lack of cash to buy healthier food. Over the last decade you can see in studies how Americans have put on weight due to poor diet.

The left-wing media’s vendetta against losing the elections by propagating false narratives to keep the White House on the defensive is doing some real, direct harm to Americans, who can least afford stand still, because they are dying.

Markets ignore Euphrates line in the sand

This will be a brief posting today, since I have to remove a large tree limb that came down on my wife’s art studio during Monday’s storm.

As I wrote yesterday, the markets are immune to a sell off despite global events. Monday’s development in the Middle East.

Humans are said to have developed in the Euphrates Valley, well this week we could see the ramping up of our demise in the same region as US-Russian warplanes may be having dog fights over the Crescent of Civilization.

Given this difficult situation where the Pentagon came out and said that US fighters will defend the airspace against all hostile actors, equity markets hit new highs, the VIX, or fear index, almost had a 9-handle and bonds are at very low yields. It’s too strange to be true.

Look no further than the price of crude. At $44 a barrel there is no premium being paid for the unrest in the Gulf Oil states as well as Middle East.

I’ll have more on this as I dig further, but there’s a limb that needs to be removed from the roof.

Markets sink on ‘I’ word, and it’s not inflation

The stock market Wednesday was shocked to hear the “I” word, and it had noting to do with inflation.

The impeachment word is being used on Capitol Hill, which took the street by surprise and sent the Dow Jones industrial index plunging 373 points or -1.8% for the day.

While the impeachment process will probably not take place and is just Democratic bluster, investors believed that the Trump Pump of tax cuts and infrastructure spending will probably be put off even further while dealing with these investigations.

So Wednesday became the Trump Dump, which many market technicians believe needed to have a sell off to build a solid bottom to move higher. The VIX index, which measures volatility, soared more than 40% yesterday and is up nearly 60% in the last 5 trading days.

This index measuring investor sentiment was below 10 just over a week ago and Thursday morning is hovering at 16, which is still on the low side historically.

Thursday morning’s futures show the Dow shaving another 100 points at the open, which would give the exchange a 2% move down for the two days, which is not enough of a shake out.

A 2,100 point move to the downside would put stocks into correction mode of being off 10% from the recent highs, which would put the Dow at around 19K.

If you look at the economic data a 10% move downward in stocks is warranted as GDP is straddling the flat line of 0% growth, while Federal Reserve projections are looking for 4% growth in the second quarter, which is pie-in-the-sky thinking.

So there are two “I” words now that can hit the market. Inflation is not the worry. Impeachment is the word du jour, but I don’t feel that word has legs from the information that is out there right now.