Thursday, April 27, 2017

All Of This Because Of A Mediocre Tax Plan And A French Election

Titillating Tax Tease

By -
It goes without saying that what has transpired in the market recently has bugged the holy hell out of me. Once again, it seems that a wallet stuff full of cash was resting on the boardwalk deck, and as we bears bent to grab it, a kid behind a corner yanked on the string and the wallet was gone.

Allow me to illustrate by way of the Russell 2000, which only last week looked beautifully poised to enter into a hellstorm of drop-i-tude:
0426-rut
And then, suddenly, based on the most-widely-expected result of a first round of an election from a country that was a superpower of the late 18th century but, let’s face it, really doesn’t mean much to U.S. corporate earnings, THIS happened:
0426-surge
So lots of charts got wrecked, and it threw my psyche into an undisciplined tailspin.
A perfect example is US Steel, which I shorted yesterday. However, as it garnered strength and started to show a loss, I threw my hands up and covered it. It wasn’t based on a stop. It wasn’t based on logic or a chart. It was based on wanting there to be no more pain from US Steel. As you probably know, symbol X is down about 20% this morning, and I have no position. So this is collateral damage from the goddamned French election, since my head is really hosed. One thin reed for the one or two bears left is the Japanese Yen, whose weakness has been a boon for

US equities. As the USD/JPY nears massive overhead supply, I believe it will reverse hard. And keep in mind that tonight, the Japanese Central Bank does their big monthly announcement and press conference, so that could move things.
0426-usd
What everyone’s got a boner about, apparently, is the newest, latest, greatest Trump Tax Plan. I seriously cannot believe how blinkered people must be to believe that he’s got some awesome plan which has a snowball’s chance in hell of becoming law. This guy has flip-flopped, back-pedaled, or wimped out on just about EVERY promise and initiative he’s made, and yet people still gobble it up.
Shut down the government? Build a wall? Invoke an active travel plan? Put Hillary on trial? GIve me a break. None of it has happened, and none of it will happen, whether you’re measuring with 100 days or 1000 days.

Anyway, these dogs aren’t going to walk themselves, but that’s where I see things right now.