Well, Yellen did it again. The market was moving merrily along and a rate hike along with 3 more announced next year. While I thought the market would blow this off, not so yesterday as reality is starting to set in that the low rates that have been around for almost 10 years now may be a thing of the past.
Of course, the Fed ignores that the unemployment number is pure fiction. They ignore the pleas from other countries that are still struggling that they do not raise rates. No Yellen has become a rate hawk and this will not bode well for anyone right now.
The U.S. recovery is the worst ever on record. A number of people out of the workforce keep increasing while the politicians brag that the unemployment number keeps dropping. And of course raising short-term rates means that the borrowing costs for the government are going to increase substantially.
My guess is despite Yellen’s appointment being good until 2018 she is gone in February.
So here we are just 5 days before the electoral college meets on Monday and tensions are mounting. My hope is no electors get attacked or killed over this. It’s bad enough they are getting death threats daily now but if one actually gets hurt Democracy will have taken a big hit.
Right now you have a lot of disinformation coming out. You have the ones seeking the electors to change saying they have at least 20 Republican that could change their vote. And then the RNC is saying no worries none will change. They are all secure.
For us out here in investment land, there is not a way to know what the truth is. But we can only be aware of the consequences if the electoral college for whatever reason either does not vote on Monday or unseats Trump as the President Elect. If this happens the Dow will be off 2000 to 4000 points immediately. Trading will be shut down and there will be a constitutional crisis.
The odds of that happening are a long shot but not near as a long shot that it might not happen. Not near of a long shot as winning the Hilton NFL contest two years in a row. Or by having Aces full on the flop and get runner runner k to be beaten by 4 kings.
I have witnessed both happening first hand over the last 3 years.
The only thing as an investor you can do is to monitor the situation. Do not get overexposed and make no serious investments prior to Monday. Remember the event does not have to happen but the anticipation of the event happening can be enough to tank the markets.
On the geopolitical front things are also heating up with Russia moving weapons to Europe’s border. I doubt that anything will happen anytime soon to give the new administration a chance to establish ties with Russia. Just something simmering in the background of a World gone mad.
I am long but took some profits yesterday. I am looking to get longer but have not decided to do it today, Friday or after the Electoral college vote Monday.
Historically we are getting very close to blastoff time. The fed pullback normally would be a very low-risk buying opportunity heading into year end. I want to take advantage of it but will use a bit of caution before Monday. Without the electoral college situation, I would be being very aggressive right now building up a str.ong position by Monday or Tuesday of next week.
If you want to follow some of my trades along with my thoughts typically given after the open you can go to @rickjswings. It’s my private twitter feed for the stock market and its free. Sports Handicapping is the subscription-based part of this site. But considering the cost of joining it’s almost free:)
Good Luck Today
RickJ’s Handicapping Picks