WEEKEND WRAP: Bombs Away, Markets Crack, Mid-Term Turmoil

October is always full of surprises, whether they be political or financial in nature.

This week was not an exception, but, rather, the rule. Losses being sustained this month - since a topping out on October 3 - have been more severe and more significant than those encountered during February and March of this year.

That's saying quite a bit, since those winter months were quite scary. President Trump was under assault from Robert Mueller, the Special Prosecutor assigned to look into allegations (not a crime, mind you, but mere allegations, an unprecedented situation in American jurisprudence) of collusion with Russian operatives in the 2016 presidential election. Since there's been no mention of "Russia, Russia, Russia" for more than a few months now, it's safe to say that Trump was right all along: the entire investigation was a massive witch hunt.

Fast forwarding to October, Trump is still being assailed, though lately it's been over what really rankles Democrats and other detractors of the billionaire in the White House: his manners, or lack thereof, his incessant tweeting, and his very obvious disdain for liberals, Democrats and especially the media at his campaign rallies. Trump gets under people's skins. Some of it is by design. He likes making people uncomfortable. It's a way of seeing what they're made of; whether they'll lash out emotionally or display grace under pressure. For the most part, the people he's attacked, prodded, and called out have reacted with a modicum of restraint, though astute observers of the political class can tell that some, like Nancy Pelosi or Maxime Waters, are becoming unhinged or already were and Trump's thumping on them is only exacerbating their conditions of unease.

Not to belabor the point, but Trump hasn't been a bad president. In many regards, he's been good for the country. It's his rhetoric that annoys people, even his supporters. He's just not very mild-mannered or even-tempered as Americans are used to in their politicians. Some people actually enjoy his brash, unvarnished behaviors, taking them as a breath of fresh air and realism, apart from the usual stultified, superficial, and, yes, condescending attitude so popular among the Washington, DC elite.

Wall Street has taken a semi-political stance on Mr. Trump. Largely, they'll tolerate his decisions and commentaries on trade, tariffs, jobs, the economy, the Federal Reserve, and unemployment. Beneath the surface in many board rooms, however, there's a distaste for his bluster and boldness. It's just not the way things are done in higher-up circles of business. C-Suite executives prefer evenhandedness couched in cloudy rhetoric, ensconced in data points. Thus, there's a willingness to blame corporate shortfalls on this president. He presents himself as a convenient scapegoat and Wall Street honchos are more than willing to cast blame his way.

More than a few earnings reports this week included references to Trump's tariffs - those either in place or those he's only proposed - as excuses for shortfalls in revenue or earnings, or, most often, in forward guidance. There is a not-so-cleverly-disguised blame game being played at the highest levels of corporate America. Executives in growing numbers are calling out Trump's trade policies as a rationale for their own failures, and, for some, rightly so.

President Trump never promised Wall Street or anybody else a Rose Garden party. He always knew, and often made clear, that his imposition of tariffs on a variety of trading parties - but particularly, China - were going to have some negative effects. Naturally, he was right. Prices for many things made outside US borders are going up, a direct result of tariffs, but the end goal is not higher prices, but fairer trade, and that is not going to occur without some pain, and some of that will be significant.

Laying ahead for the economy, Wall Street and US consumers are higher prices right at the most inopportune time, the holiday buying season. When the final tallies from the fourth quarter are posted via retail sales figures and fourth quarter earnings in January, 2019, the numbers are likely to cause an even bigger shock. With all of America preconditioned for ever-expanding economic data, the fourth quarter of 2018 may look to some like the end of the world, if certain conditions are met, those being, retailers will slash prices to boost demand, resulting in lower profit margins and poor performance for some major companies. Trump and his terrible tariffs will be blamed.

This week was also overwhelmed by the "one big story" about the mad bomber from Florida who sent poorly-designed pipe bombs to former presidents and officials, presidential detractors, and a few current office-holders, all of whom shared one characteristic: they disliked or disagreed with President Donald J. Trump. Fortunately, the bomb-maker was highly unprofessional. None of his masterpieces of terror actually detonated.

Nevertheless, the "suspicious" packages that appeared all at once in mailrooms, postal facilities and elsewhere engendered a media frenzy and resulted in a quick arrest of the very obvious suspect, Cesar Sayoc. His background and the continuing investigation and eventual trial will extend well beyond the mid-term elections. For those wearing tin-foil caps and assigning this event to the "false flag" files, Sayoc's timing appeared to be too coincidentally close to election day. There's all sorts of spin. Most of it is not worth a moment's reflection.

Which brings up the matter of the mid-term elections, as if they were some world-changing event upon which the ultimate survival of American democracy and the rule of law hinged. That's how the media would have us view it, though contention for House of Representative seats occurs every two years without fail. Which party controls it gives power over committees to the winning side, the losers left to plot ways to undermine and unseat their successful opponents. This one's a little different, as it is something of a referendum on the Trump presidency, or so we've been told. The results won't matter much in the larger scheme of things since Washington DC politicians seldom do anything well, or right, or, at all. The mid-terms are just an excuse for advertising companies to make money and for politicians to claim they're on the right sides of various issues. Generally speaking, the American public would be better off if there were less politicking, less government overall, and less preening and posing for cameras by the stuffy types that populate the interior the DC Beltway.

How does politics affect stock prices: a little, but, in the end, not much at all. The mid-terms are all about bloviating and posturing and ballot-box stuffing, and boasting. Whoever wins will claim the juicy committee chairs. Should the House flip from Republican to Democrat this year, though, it will be an unmitigated mess, rom media crowing about the victory of globalism over nationalism, to absurd proposals to impeach President Trump. That is the one scenario that even Wall Street is afraid to embrace. It could unhinge everybody and everything.

Notwithstanding any such Democrat miasma, the mid-terms will come and go in another 10 days or so, and with it any chance to blame either party for the downfall of the economy (which is actually doing quite well) or for particular industries or companies. They'll be done and the media can dance around the implications until the new political faces are sworn in come January. None of it will make any difference to stocks, bonds, or the prices of oil, natural gas, gold, silver, sugar, tea, coffee, or Diet Pepsi. Nothing. Unless the Democrats take control of the House. Then, look out.

As far as stocks are concerned, well, they're still largely overvalued by most traditional measures, those being straight up PE ratios or the more in-vogue CAPE (Cyclically Adjusted Price Earnings) ratio, a Robert Schiller concept that measures PE over a 10-year period rather than just the most recent one. It's sensible, and now, widely employed. According to the current chart, the CAPE is at 30.00, down a little due to the recent sliding, but still above 2008 levels and about even with 1929's Black Tuesday, from which the stock market crashed and was a contributing factor in the Great Depression.

That said, this bout of volatility in markets is not about to abate. Not by any means. All of the major indices closed out the week below their 200-day moving averages, and, maybe more importantly, the weekly charts put them below their 40-month moving averages, something that hasn't happened since 2008-09.

Stating the all-too-obvious, markets move in cycles, and the bullish cycle is about over. The bearish case - and this again is confirmed by Dow Theory, and we will spare readers the explicit numbers for now - has been signaled and is already underway. The only way up from here is to get to the bottom. There will be bumps, grinds, irrational exuberance, toil, trouble, relief rallies and false alarms, but the trend is your friend and the trend, friend, is down.

Dow Jones Industrial Average October Scorecard:

Date	Close	Gain/Loss	Cum. G/L
10/1/18	26,651.21	+192.90	+192.90
10/2/18	26,773.94	+122.73	+315.63
10/3/18	26,828.39	+54.45	+370.08
10/4/18	26,627.48	-200.91	+169.17
10/5/18	26,447.05	-180.43	-11.26
10/8/18	26,486.78	+39.73	+28.47
10/9/18	26,430.57	-56.21	-27.74
10/10/18	25,598.74	-831.83	-859.57
10/11/18	25,052.83	-545.91	-1,405.48
10/12/18	25,339.99	+287.16	-1,118.32
10/15/18	25,250.55	-89.44	-1,207.76
10/16/18	25,798.42	+547.87	-659.89
10/17/18	25,706.68	-91.74	-751.63
10/18/18	25,379.45	-327.23	-1,078.86
10/19/18	25,444.34	+64.89	-1,013.97
10/22/18	25,317.41	-126.93	-1,140.90
10/23/18	25,191.43	-125.98	-1,265.88
10/24/18	24,583.42	-608.01	-1,873.89
10/25/18	24,984.55	+401.13	-1,472.76
10/26/18	24,688.31	-296.24	-1,769.00

At the Close, Friday, October 26, 2018:
Dow Jones Industrial Average: 24,688.31, -296.24 (-1.19%)
NASDAQ: 7,167.21, -151.12 (-2.06%)
S&P 500: 2,658.69, -46.88 (-1.73%)
NYSE Composite: 11,976.95, -141.90 (-1.17%)

For the Week:
Dow: -756.03 (-2.97%)
NASDAQ: -281.81 (-3.78%)
S&P 500: -109.09 (-3.94%)
NYSE Composite: -480.32 (-3.86%)

America And The World Approaches The Brink Of Disaster

Let's get back to business here.

Whether or not anybody wishes to admit or observe it, America is in the midst of a crisis of almost unimaginable proportions.

We have a federal government teetering on complete disintegration over a variety of issues, including, but surely not limited to: the repeal/replacement of the Affordable Care Act (ACA, or ObamaCare); a runaway, subversive intelligence community; a Democrat party that is intent upon destroying the presidency of Donald Trump and thwarting him at every opportunity, with capable assistance from the fake media establishment in the guise of the New York Times, Washington Post, Politico, NBC, MSNBC, CBS, ABC and especially CNN (Criminally Neurotic Network); a Treasury nearly $20 trillion in debt and congress not even close to any agreement on any kind of fiscal budget or even discussion of such as the debt ceiling is being superceded.

There's more with which to deal, like crime, illegal aliens, Trump's temporary immigration ban, terrorism and such, but the issues before our broken congress are the main drivers taking the nation to the brink of disaster and quite possibly over the edge.

Not wishing to sound too pessimistic concerning the current state of affairs in the former land of the free, individual freedoms are at the core of what ails this country. If anything can be accomplished by our elected representatives, it would be first to repeal the Affordable Care Act, or, at the very least, permanently remove the individual mandate that requires every taxpayer to purchase health care or face increasingly punitive fines for failing to comply.

As it stands, the IRS is reportedly not enforcing the "law", conforming to President Trump's first Executive Order, issued on the day of his inauguration, in which he instructed all federal agencies "to exercise authority and discretion available to them to reduce potential burden..."

The more corrupt the state, the more numerous the laws.

-- Tacitus, The Annals of Imperial Rome

So, we have lawlessness being visibly encouraged, though it is directed against a law, the ACA, that carries within it, in the form of the individual mandate, a certain unconstitutionality, codified by a corrupted federal judiciary, i.e., the Supreme Court. Incidentally, that same Supreme Court is hopeless, deadlocked with eight justices, until, perhaps, the Senate decides to confirm the President's nominee, Neil Gorsuch, to take the positioned vacated by the late Antonin Scalia.

While Washington continues to devolve and approach the gates of hell, apparently driving chariots of fire, like gawkers and bookmakers, Wall Street insiders drives the market up, down, sideways and to its breaking point. The entire retail sector - with Sears leading the charge - is collapsing. Radio Shack recently re-entered bankruptcy, hopefully for the final time, and Payless Shoes is on the block. Malls across America are fast becoming nothing more than exercise walking routes for seniors rather than the shopping "experiences" for which they were designed.

We are changing, but we are not growing. The bulk of any profit is eaten alive by taxes, regulations, corporate executives, hackers and other thieves. In the end, there's little left for the common man.

And that's a crying shame, because the common man (and woman) is the person who built the country, who made it great, who is watching it self-destruct and who has nothing to do with the great default that is upon us.

The government is the problem, and seeking solutions from that very same government, be it federal, state, or local, is not a winning strategy. We will only get more of the same, and the same will only sink the nation further into the morass of stupidity, overspending, and normalcy bias with which we are currently plagued.

Our current malaise is not a democrat or republican issue. It is not liberal nor conservative. It is purely greed, avarice and corruption at every level that has besieged our once-great nation and if ever the United States of America is going to become - as the current resident of the White House proposes - great again, we must begin to call out the corrupt, the purposefully vague, the unequivocally deceitful, rapacious legislators and governors and bureaucrats that have lain waste to our nation, and all those who either back them, encourage them, enable them or act as apologists for them.

We are as close to systemic breakdown in our culture, our politic, and our economy than at any time since World War II, and that is a frightening prospect. More frightening, however, is the idea, the very concept, that ordinary people expect positive results from the very people who promulgated the predicament in the first place.

If Mr. Trump, the preeminent deal-maker of this generation, is unable to come to grips and compromise with the congress and the judiciary, it's likely that all that America has stood for will have been for naught, for we will bear witness to the destruction of the world's greatest constitutional republic in history.

But, if the wise and courageous among us will act, the destruction may yet be avoided. We face the fight of our lives over the next few years, and we cannot afford to fail.

It's not just economy at stake, but liberty and life.

Global Markets Fall In Reaction To Trump Immigration Ban

In what may have been a completely convenient excuse to unwind some positions in overheated markets, analysts blamed Monday's global meltdown on US President Donald Trump's hastily-enacted immigration ban.

While the ban covers only seven countries - the same ones covered under a similar program under President Obama (Iran, Iraq, Syria, Yemen, Somalia, Libya, Sudan) - reaction from both affected and unaffected countries has been vocal, but especially in the US, where protesters (many of them paid) set up camp at airports in major cities.

Aside from the obvious left-leaning, liberal crying and tooth-gnashing, market participants largely over-reacted to the condition, giving pause to any instant analysis. What Trump may have done with the ban is fire a first volley in what may eventually prove to be an escalating trade war with the focus more on currency manipulation and tariffs than immigration limits and its consequences.

Not only were US markets lower on the day, equity indices around the world were down. That's an unusual circumstance worth noting, because, in the normal conduct of business, somebody's loss often results in gain somewhere else. Apparently, this was not the case, leading to the belief that the off-hand selling was little more than relief form overextended stocks.

On the flip side, this one-off event could be the beginning of a disorderly decline in the value of major equities around the globe and a beginning to the dismantling of a monetary system and bull market both of which are creaking from old age.

The days and weeks ahead should offer better insight to the overall direction of markets. Perhaps Trump's "America First" pledge means that US stocks will feel the brunt of the correction before the rest of the world gets on board. Deflation has reared its ugly head once again.

At The Close 1.30.17:
Dow: 19,971.13, -122.65 (-0.61%)
NASDAQ: 5,613.71, -47.07 (-0.83%)
S&P 500: 2,280.90, -13.79 (-0.60%)
NYSE Composite: 11,205.24, -77.95 (-0.69%)

Trump Wins, America Wins, Fearless Rick Takes A Victory Lap

November has, thus far, been an amazing month.

The Cubs won the World Series for the first time since 1904, Donald Trump won the election for president, and the Dow Jones Industrial Average registered a new all time high.

Fearless Rick outside Trump rally this Spring

In the meantime, as an aftermath to the historic, transformative election win for Donald Trump, a businessman, a TV idol, not a politician, students and other dissatisfied people are protesting the result of the democratic voting process.

To some, the protests may appear preposterous, pompous, self-indulgent, or just plain stupid. But, this is what America is all about: freedom of speech, freedom of expression, freedom to say and do whatever one pleases, so long as those words or actions don’t impinge upon those of others. It’s a thin, blurry line upon which we traverse with free speech and free assembly, but it is there, and, to a large extent, it is going to be respected.

Truthfully, the number of people protesting the election result is ridiculously small in comparison to the number of people who voted for Mr. Trump or Mrs. Clinton, so, to a large extent, the protests should be easy to ignore. The more one ponders the wisdom of protesting the result of an election, the more absurd the proposition becomes. The election was the result of months and months of free expression by the candidates, their surrogates, supporters, detractors, and the media. The time for marching and shouting was before the election, not after it. With any luck, that concept will sink in to the kids on the streets and college campuses and they’ll slink back to their jobs, classrooms, or parents’ basements and life will go on as usual.

Protests against the president prior to his inauguration, are likely to be ineffective. Maybe that hasn’t gotten through to George Soros and his ilk, who almost surely have funded and promoted these most idiotic of events.

But that’s not the point of this message. The point is to remind readers that the editor of this blog, Fearless Rick, himself called the election result correctly a month prior to it, calling for a Trump landslide, the result of millions of fed up Americans taking back their nation. Honestly, it was more of a hope than an educated prediction, but, as the pollsters and number crunchers themselves have admitted, they blew it. They didn’t see the millions of Americans who felt disenfranchised and disrespected by the likes of liberal goons promoting gay rights and LGBTQ liberties, who lost jobs because the government made moving industries out of America a profitable decision, who pay taxes for schools that don’t teach, elected officials and bureaucrats who don’t represent them, a media that mocks and ridicules them for being old-fashioned, out-of-step, or even selfish.

The backbone of America was awakened by a man who refused to toe the line of political correctness, who stood against open borders, who stood for the working men and women of this country, the middle class, the downtrodden, the forgotten. Donald Trump was a lightning rod for the pissed off, angry folks in the country who had seen enough of their rights stripped away and were afraid the choice of Hillary Clinton as the next president would have brought upon an epochal eventuality wherein the few remaining rights would be stripped in time.

They were probably right. Democrats and liberals alike have worked tirelessly to limit the second amendment, to nullify free speech, flout the immigration laws, disrespect the rule of law, and gradually, slowly, but incessantly, turn all of America into a totalitarian welfare state of chaos and complete government control. That was not the America most of those who voted for Mr. Trump wanted. Many of the Trump voters were older, who remembered a time when America was a safer place, a freer place, a happier place, and they wanted it back.

In electing Donald Trump as the nation’s 45th president, they may have taken the first step toward a restoration of the America, a return to morality, to honesty, to civility, to economic and true social justice. Making America great again, to borrow from Trump’s slogan, is not going to occur overnight, or even in the four years Mr. Trump will serve as president. It’s going to take a while to unwind all the bad legislation and trade deals and economic imbalances that were the result of crony capitalism. And Mr. Trump is not going to be able to do it alone. He is going to need not just the House of Representatives and the Senate but also the voices of those who voted for him and support his ideals. Winning the election was just the beginning. The left and their compliant media lapdogs are not about to go away and hide. They are going to fight back, lash out and tear at the fabric of society.

They will fail, and they will fail miserably because their vision of America, complete with free college educations, fifty million people on welfare, twenty trillion dollars of debt, overpaid government employees, and a severe lack of good, fulfilling, well-paying jobs, is not America at all. It is a liberal, dysfunctional, diseased obsession and fantasy.

The America represented by the people who put Donald Trump in office is an America of hard work and good pay, of duty to God, country and family, of fearlessness in the face of adversity, of helping neighbors and those less fortunate, of friendliness, honesty and humility. The America which will be refreshed is one of opportunity, freedom and justice for all.

It’s hard to believe that anybody in their right mind would protest that.