The markets are hovering around the even mark about an hour before the open.
Of note, Financials strong, Oil and metals weak and everything else around even.
Slightly positive for the markets.
We are in a period now of watch and wait. The markets have worked off being overbought and are now a bit oversold. But very mildly.
I am inclined to be cautious here. There is just too much going on that could shock this market. The biggest is the political chaos in the U.S. It is only going to get worse with the Special Counsel hanging over the political landscape.
I do not think there is one chance in a thousand that the special counsel does not find something to charge the president with. If they do that will trigger an untold amount of chaos in the U.S. The Dems and Never Trumpers will scream for impeachment.
However, Unless the makeup of the house changes, it is unlikely impeachment will happen. Although there are enough never Trumpers in the Republican party that it will be closer than most think.
In the House only a simple majority in the Judiciary committee and a simple majority in the house to move the process to the Senate. As hostile as the Senate has been toward this President, again, 2/3 vote will be much closer than people think.
That is the path it appears the U.S. is heading down. If it happens, the chaos we are seeing now is nothing compared to what it will be.
It would take a miracle to stop the U.S. from going down this path. And even then, a miracle might not be enough.
The stakes are too high right now for either side to give an inch on this. Most think it’s globalism vs nationalism at stake. I hardly think that is the issue here. The corruption in the U.S. is so extreme that many cannot afford to let this administration do its job. If the swamp is drained people are heading to prison.
So to me, it appears it is life and death for the participants. Which means the U.S. is headed for chaos it has never seen before. In all likelihood, a constitutional crisis is in the future. Most likely that is why the President is surrounding himself with 4-star generals. He knows all too well what is coming.
Now, perhaps my imagination has gone wild:) Could be, that is always a possibility when you’re dealing with a human mind. I like to think of myself more Vulcan however but I have been prone to go off the deep end from time to time. (very infrequently).
So we will see. But if my scenario unfolds the markets are in for a beating. It’s the timing that is the tough part.
What everyone seems to miss in the above scenario is the U.S. voter. What are they going to do in 2018 and then again in 2020?
I am going on the premise that the voters that voted for Trump are sticking with him for the most part. If that premise is true, then the Dems and Never Trumpers are going to take a beating in 2018 and 2020. Now, they will most likely try to time an announcement of criminal charges just prior to the 2018 elections. But, for the most part, the Trump voters have already decided that this entire process is a witch hunt.
So, I expect the vote to go solidly against the Dems and never trumpers. When I look for value in the political odds the above is the assumption I am making.
If your analysis comes to different assumptions then you will not like my wagers. That is why I think taking the odds on Ryan has a lot of value. Also betting against Flake being reelected looks to me like easy money. You lay 2 to 1 and my guess is the odds should be 10 to 1 against reelection.
A few other political wagers that look good to me:
Raise act being enacted in 2017 is 8 to 1 against. Looks to me more like 50 to 1 if not higher. Lay the odds.
I had mentioned taking Moore in the Alabama special election, taking 6 to 5. The odds are now 6 to 3 in favor of Morre winning. I still like Moore. 5 to 2 seems more like it. to me.
New odds are coming out almost every day now. If I see anything else I like I will post it.
In any event, I am sticking with short term trades for the time being. I do not wish to get caught when the political situation in the U.S. starts deteriorating even further.