Stock Market Swoon

Why has the stock market started down again after a dramatic bounce off of the late March lows? Of course I don’t really know. Yes, it might be natural profit taking after such a monumental increase ... or the recent fall off in the price of oil ... or the market could just be “over-bought”(a frequently self-justifying Wall Street term) ... or maybe fear of a Conid-19 resurgence? Or a combination of all of these?

But I have my own special reason — Biden has recently surged in the polls to a double digit lead. I think that the market views a Biden victory in November as economic suicide.

Predictions.

I have been batting like the ol' Ted Williams  of late ... predicting the U.S. stock market swoon arising out of the Asian contagion  ... see: Broken China ... and recently forecasting that Obama would, by fiat, allow droves of Syrian refugees into the United States ... see: Good Fences. See the Syrian refugee prediction coming true here: U.S. News Story. Not to mention my prescience about "climate change" and Hillary Clinton.

Now, if only I could get nominated to the Soothsayer Hall of Fame ...

Wall Street Speaks

Dow Jones Industrial Average YTD

Recently we were told that, if the U.S. debt ceiling was not raised, the stock market would immediately crash by at least 1,000 points.  Now, the debt ceiling has indeed been raised and The Barry has inked the compromise bill ... and what has happened?  The Dow Jones Index has dropped almost 800 points over the last week ... almost 260 points of which happened today ... even after this supposed "catastrophe" has been averted.  Now, Wall Street typifies cynicism and contrary-ism, but why have buyers, in euphoric relief,  not rushed back into the stock market?  May I offer a few possible reasons for this Wall Street swoon:

- Despite the stated objectives of this deal, there is a strong likelihood that this current administration will not live up to the compromise's terms that are contain therein ... just like the Democrats did not live up to the early-on deal that they struck with Ronald Reagan wherein tax rates were cut but somehow the bigger spending cuts never occurred (see Reagan's Deal).

- This compromise did nothing to address the elephant in the room, entitlement reform.

- The debt ceiling, being raised by this deal, results in immediate (profligate) government spending whereas the "equivalent cuts" will take place over ten years.

- This next round of before-Thanksgiving budget cuts dictated by this deal will be designed by a "bipartisan committee."  If we thought that the political theater was farcical for these last sweltering weeks, just wait until this committee starts its deliberations ... quickly followed by dueling press leaks.

- This bill contains no serious path to achieve a balanced-budget amendment to our Constitution.

- This grand compromise enables The Barry to avoid another debt ceiling battle before next year's election.  This likely increases his chances of having another 4 years of waygu beef, White House festivities, and frequent family vacations.

So, those talking heads who had opined about the financial markets positive reaction to this deal (or the negative reaction to the "no-deal" alternative) were dead wrong ... perhaps because the words coming from their heads were stifled by about a yard of their bowels.