The Market Perspective

Vaccine Trumps Election, for now

Monday Morning 9 34 AM CST

 

The DJIA is another  40 points this morning maintaining its break out from last Monday. We noted this occurrence in our weekend update.

Here is something I just copied off Finance. Yahoo.com

 

This is NY Times who of course never has anything good to say about Trump.

 

Dominion Voting Machines denies any wrong doing or ties to any Democrat.

Still one has to wonder if this uncertainty will ever matter to the market, so far no.

Hopes for a vaccine have lifted banks, casinos, cruise, all hospitality.

 

WASHINGTON — President Donald Trump’s refusal to concede the election has entered a more dangerous phase as he stokes resistance and unrest among his supporters and spreads falsehoods aimed at undermining the integrity of the American voting system.

More than a week after President-elect Joe Biden was declared the winner, Trump continues to block his successor’s transition, withholding intelligence briefings, critical information about the coronavirus pandemic and access to the vast machinery of government that Biden will soon oversee.

Some former top advisers to Trump have said that his refusal to cooperate is reckless and unwise. John F. Kelly, Trump’s former chief of staff, called it “crazy” on Friday. John R. Bolton, the president’s former national security adviser who wrote a scathing memoir about his time in the administration, said the refusal “harms the country.”

 

 

“Every day that he delays under the pretense that he’s simply asking for his legal remedies ultimately is to the country’s disadvantage,” Bolton said on ABC’s “This Week” program on Sunday morning.

Stocks Hold the Break Out from Monday

Weekend Nov 14 2020

DJIA had a big move up Monday over  1600 points. It gave back about half the move that day. Since then the market has chopped around but held above the break out level. Financials had a good week as interest rates increase.

 

The same is true for our proxy stock Cullen Frost.

We got a Dow Theory buy signal in that Industrials and Transports both moved to new highs one confirming the other.

 

Small caps held their break out level as well.

Last weekend we noted the bi polar negative mood of the nation. It is not however showing up in broad stock prices so higher prices lie ahead.

Rising Interest Rates

This move percentage wise is huge!  No one on the Biden team is noticing this or considering how it will effect his multi trillion dollar spending plans.

TBF  A Bear Bond Fund Price moves up as bond prices move down

coming at the end of the interest rate crash from  1981 - 2020 this could be a long term hold for years.

Market Pulls Back

Friday Nov 13 2020

After Monday’s Spike, Markets Sputter

 

President-elect Joe Biden’s campaign promise to phase out oil probably signals the end of the long-delayed Keystone XL oil pipeline and threatens the future of Dakota Access, another major crude conduit.

Obstructing pipeline projects is one way Mr. Biden could accelerate America’s shift toward renewable energy, by making oil more difficult and expensive to move around. Other policies that require legislative signoff would be more challenging to implement unless Democrats won control of the Senate.

Based on Wall Street Jouranl Reports

We warned of the return of an EPA run wild in a Biden administration. Already his transition team is targeting pipelines. Next will be a war on natural gas similar to the one that put West Virginia’s coal industry out of business.

Last Monday November 9 was a big up day in the markets. The DJIA soared 1,600+ points. Crude oil jumped three dollars. Both occurred on the idea that a virus vaccine would soon be available. Then, the thinking went, travel and leisure activities might return to something more normal. Since then the DJIA gave back about 1,000 points. West Texas Intermediate hit $43 and now has receded to $41.12.

Market tops and bottom as often characterized by a final sharp spike, up or down, in a burst of optimism or pessimism on the market in question. That may be the case here. The advance decline ratio has dramatically fallen each day since Monday.

A lot hinges on the Georgia Senate race. So far the Senate is even at 48 Senators for each party. But both Georgia Senate seats are in run-off races for January 5. If Democrats Jon Ossoff and Raphael Warnock win, the Democrats will control the Senate via Harris tie-breaker vote as President of the Senate.

Biden is the Trojan Horse which has allowed un-electables like Bernie Sanders (next Labor Secretary?) and Kamala Harris (did not even last to the Iowa Primary) to achieve national standing. A Green New Deal, higher corporate taxes, open borders, handouts for fiscally irresponsible states all seem like an unlikely foundation for a continued stock rally. We have noted the high price earnings valuations of the tech stocks which have driven the rally so far.

Watch for the outcome of the Georgia run-off for the next clue about 2021.

Monday was Irrational Exhuberance

Thursday Nov 12 2020

PMO is peaking now, this market could fall a good bit from here.  Biden is already talking lockdown, that will not help business already on the edge.

 

Transportation

gap filled but PMO is turning down

Bonds and interest rates

We have had quite the rally in interest rates. look for rates to correct to a lower level.Notice MAs are converging as they do before a trend change. 1.5 looks like a valid target.

 

A final Fifth Wave?

Tuesday Nov 10 2020

We wrote about negative mood this weekend. But the stock market had other ideas posting a 1600+ point open Monday.

It gave back half that by the close. And other indexes either did not make a new high, Russell, or like the NDX actually closed lower.

the early Sept high is now seen as wave three, an A B C correction took to the lower trend line for wave 4.  And Wave 5 ended with the sort of excitement one would expect from a ten year rally.  But internals were not as strong as one might think.

Interest Rates on the Rise

FED Chair Jerome Powell is on the cover of Barrons.  Confidence is so high that he is in control of interest rates, Biden is likely to re nominate him.  But this chart shows a big rise in long term rates. I doubt AOC knows much interest rate history preferring Modern Monetary Theory that the US can print all the money it wants. A continued rise in rates, which is what is happening, will make the multi trillion dollar spending packages of AOC and Bernie prohibitively expensive.   And rates are not rising on inflation. Gold collapsed $100 Monday. silver was dowon  7.64% for  the day.  Oil rallied over three bucks but that just gets it back to the $40 level.

I have enjoyed William Devane as an actor and he looks great in the leather jacket on what appears to be a battle ship, big guns in the background. But someone tell him it is time to sell not own metals.

Everything travel related rallied, airlines, hotels, casinos, cruise, and refiners. Let's see what the rest of the week holds.

 

5th of a 5th of a 5th

Monday  Nov 9 2020

Okay I was off a day Friday

 

but this looks like a throw over fifth wave

more media that trump is challenging the election

more tomorrow

Stocks Soar on Vaccine News and Election Outcome

Monday Nov 9 9 00 AM CST

This looks like a a fifth wave extension.  All that is lacking is playing a recording of Happy Days are Here Again.

 

Carnival Cruise

 

 

In fact mood is trending positive regarding the vaccine and the election. Carnival shares jump 30% on the open.

walgreens and CVS soar as well

Thousands Celebrate Biden Victory

As noted this weekend, AOC plans revenge list, hardly unityl

Transports  Come Back to Earth

I expect that gap will ve filled in the next couple of days.

the most amazing aspect is that oil prices have jumped over $3, apparently on the idea that business and travel will be returning to noormal.

 

Airlines, Hotels, Cruise stocks, all soaring

More after market close.xl

 

 

 

A Jump in Negative Mood

Weekend Nov 7 2020

The bull market of  1982-2000 began after Reagan had been in office two years.  Paul Volcker had finally broken the back of uber high interest rates. The country was recovering from oil embargo two.  Reagan kept talking about the shining city on the hill and began deal making with Tip OI'Neil.  Bill Cosby began his come back in  16981 with Bill Cosby Himself, a great stand up comic routine.

https://www.imdb.com/title/tt0083652/

This led to his getting The Bill Cosby Show about  The Huxtablles  about two upwardly mobile family of color. It ran from  1984 to  1992, the first half of that bull market. Today however Bill Cosby sits in jail.

Reagan would wallop Mondale in the electoral college 525 to  13. We had a popular President with mass support all across America.

Now none of those social events are taking place.

AOC and Obama supporters are starting Nixon like enemies lists.

https://www.breitbart.com/2020-election/2020/11/06/leftists-never-trumpers-begin-compiling-lists-of-trump-supporters/

There is no room for disagreement, a classic American tradition, in the world of AOC.

“Democratic socialist” Rep. Alexandria Ocasio-Cortez (D-NY) tweeted: “Is anyone archiving these Trump sycophants for when they try to downplay or deny their complicity in the future? I foresee decent probability of many deleted Tweets, writings, photos in the future.”

Michael Simon, who describes himself as a former staff member in Barack Obama’s administration, replied in the affirmative, linking to what he called the “Trump Accountability Project”:

Yes, we are.

The Trump Accountability Project (@trumpaccproject)

Every Administration staffer, campaign staffer, bundler, lawyer who represented them — everyone. https://t.co/PHx8v8GxOp

— Michael Simon (@mbsimon) November 6, 2020

This is negative mood on display. Bull markets develop as we move from the negative mood of the  1970s to the positive mood of Reagan.  Joe Biden ran on unity but what will be delivered is anything but.

The lead article  in the Review Section of the Weekend WSJ is titled

Can the West Still Lead? The article even coins a new term , Westlessness, the belief that the West has lost its ability to lead.

Again Reagan postulated freedom leads to prosperity. Yet today China after a remarkable three decades of growth shows prosperity can occur without any freedom

Demonstrators are in the streets of the US, Belarus, France, South America, you name it.

This is not how waves of positive mood generate a new bull market.

Adding to our list, interest rates have been declining and are now likely to quickly rise.

https://www.mcoscillator.com/learning_center/weekly_chart/post_el_nino_cooling_means_a_bottom_soon_for_bond_yields/?utm_source=McClellan+Chart+In+Focus&utm_campaign=ce65568e09-email_cif_2020-11-05_post_el_nino_cooling_means_a_&utm_medium=email&utm_term=0_9e79f8200f-ce65568e09-120091678

Only the NDX and NASD have made new highs in the US. All other indexes peaked February  12.  Sure prices may spike again on the end of the election. But evidence mounts this is all more likely an end to the ten year rally.

Monthly PMO in bottom panel is headed down, not up. HIgher interest rates and more regulation are not going to goose this market higher.

The Energy Industry on Life Support

Friday Nov 6 2020

There is no such thing as a moderate Democrat. When they need 60 votes, they get them.

Laura Ingraham on Obamacare passage

Friday November 6 2020 8:00 AM CST

At this writing four states remain undecided, Nevada (6), PA (20), NC (15), and Georgia (16). Trump would have to win all four to be re-elected giving him a scant 271 votes, one over the threshold.   Biden at 264 needs only one, Nevada would do it, even if Trump wins the other three which seems unlikely.

This is a column about energy issues in Texas so let’s frame what this outcome is likely to mean. Let’s focus on the 7^th Congressional District in Houston. It is where I went to elementary school in Bellaire, TX. The seat was Republican for five decades including George H. Bush tenure. But ‘moderate’ Lizzie Fletcher D, an oil and gas attorney, gained the seat in 2018. West Point Graduate and Army Veteran Wesley Hunt R lost 50.8% to 47.5%.

Google Lizzie Fletcher voting record and you can see she votes 100% down the line Democrat on eight of eleven issues. On Big Business she votes 0%. Now re-read the opening quote from Laura. The smart bet is that fletcher will vote 100% when Biden sets out to destroy the oil industry (they pollute) along with AOC and Bernie Sanders.   This is truly ironic, a native Houstonian votes to destroy the industry that made the city what it is.

Biden says only that he will outlaw fracking on Federal lands. That is a problem for New Mexico but not Texas. As mentioned last week, recall the Obama era EPA administrator who promised to crucify the oil industry. A Biden EPA will create the same slow death for oil as for coal, a thousand strangling regulations telegraphing all to get out of the oil and gas business.

The jobs report this morning claims 638,000 jobs were created and unemployment stands at 6.9%. I expect the virus will cease to be a big problem if Biden takes office, it will be much more important to implement the agenda he never wanted to discuss during the campaign.

The stock market has been on a tear this week, flirting with 28,000 DJIA. The best explanation is an either or.   If Biden takes the White House and the House, the GOP Senate blocks statehood and re-numbering the Supreme Court. If long shot Trump wins, the House hobbles many of his efforts.Damage from the Federal Government is at least minimized for two years.

Expect the energy industry you know to morph into the wind and solar fantasy of Obama.

Another 500 points, what is going on

Thursday Nov 8 2020

I happened to catch Dan Crenshaw this morning on Fox. He explained it this way.

Biden wins but GOP takes Senate, that should stop most of his socialist plans.

Trumps wins but does not have House, that stops most of his plans

 

So either way we have less govt interference, bingo the market is happy and advances

that is the most reasonable explanation I have heard