Week in brief: October 14

October 17, 2016

Stocks dropped en masse last week. Foreign and domestic. Large, mid and small. As if they'd walked up to edge, joined hands and jumped together. Leaving the S&P 500 sitting 2.61 percent beneath August's record high.
Looking at earnings, big banks got off to a good start. JP Morgan, Citigroup and an embattled Wells Fargo all beat expectations on better fixed income, commodities, and currency trading revenues.
In fact, according to FactSet, those companies having reported Q3 earnings thus far have seen 76 percent beating earnings expectations, while 62 percent have beaten on sales.
So far, so good.

Economically, September retail sales rose 0.6 percent, in line with consensus estimates and considerably better than August's 0.2 percent decline. Thanks to auto sales and gasoline. Still, the data led to a cut in the Atlanta Fed GDPNow Q3 growth estimate to 1.9 percent. Off August's estimate of 3.8 percent.
Still can't nail any kind of substantive growth.
Leading to a rather blasé speech by Fed chair Janet Yellen. Really a non-event. Though she did note that future policy may need to become even more accommodating. Yawn...
More acutely, average Americans continue to fret over their economic circumstances. Regardless of how often they're told to feel good by politicians, talking heads and other purveyors of the blathering punditocracy.
The latest Marketplace-Edison Research Poll reveals that 30 percent of the nation feels they will lose their jobs over the next six months. 10 percent higher than last year's results.
Tellingly, while 37 percent of those surveyed felt their economic situations had improved (21.5 percent thought it worse), only 30.3 percent said the overall economy was better. Moreover, 36.9 percent thought the economy was worse.
Mid-October seasonality should now serve as wind in investors' sails. Though the market's trajectory has become worrisome from a technical perspective.
Here's why.
Barely 30 percent of NYSE stocks remain in up-trends. A figure that stood at 80 percent in July. But stocks have hardly moved. And while optimists tout that the market has burned off an overbought condition, pessimists will counter with evidence of raw investor apathy.
And according to market wizard Ray Dalio, pessimists may be on to something.
Dalio has explained that the "biggest force in the stock market right now is the buybacks and mergers and acquisitions." Adding that "something like 70 percent of the buying in the stock market is along those lines."
Surprising? But true. So, when buybacks are turned off, how will Mr. Market respond? We'll soon find out.
Because 90 percent of S&P 500 companies will report earnings by November 4. Accordingly, they cannot buy back shares until after that period. Leaving the market in a buy-back vacuum. So, if Dalio's prescience is correct, we'll soon know if stocks can elevate themselves, or if it's the drugs juicing the vital signs.
The point? The market sits at a critical juncture. S&P 500 level 2,125 had served as resistance, but became a support level once the index ascended beyond that point. A multitude of stocks have crossed beneath their 50-day moving averages. Even as the index itself remains higher. From a sector perspective, only tech, industrial, financial and energy stocks remain in uptrends.
If the S&P 500 drops back below 2,125, it could signal the beginning of a new sideways drift. One that prospectively involves a downward tendency. Should support hold? Then markets will likely transition into a nice, year-end rally. The good news? The 2,125 level held today. Further solidifying support by sending the index higher, as seen below.
All of which merits careful scrutiny moving forward.
Speaking of moving forward, you'll want to check out the new technology going into BMW's futuristic motorcycles. Believe I saw these in the Matrix movies years ago. Very cool stuff... here.
Over in the Ivory Towers of Universityland, the Big 12 held a two-year tryout entrants to its depleted ranks (Big 12 has only 10 schools). Three months ago, the conference announced that it had narrowed the candidates to 11 schools. Frontrunners BYU, Cincinnati and Houston spent millions trying to secure a spot. Yet, after all of the sound and fury, Big 12 expansion was much ado about nothing. Yesterday, the conference failed to crown a single new entrant. Determining to stick with its subpar status quo.
WikiLeaks Reveals Heinous Lack of Respect for Electorate
Finally, the latest Wiki Leaks revelations have provided the philosophical coffin nail regarding our aptitude to deal with this ugly election.
Whatever happened to having a healthy respect for one's candidates? Knowing that each was -- on the merits -- a fundamentally ethical, honest and competent human being? Harboring the best of intentions?
Today's candidates strike me as venal, dishonest and self-serving.
Trump appears a megalomaniacal buffoon. And the recently leaked emails confirm suspicions that Hillary and her team cannot stand half of the electorate they seek to lead.
Primarily, the emails were focused on Clinton campaign chairman John Podesta. Serving to reveal the Clinton team's disturbing lack respect for people of faith, minority voters, and any of the electorate not sharing Hillary's political ideals.
The Clinton team uses terminology like "bitter clingers" and "basket of deplorables" to describe those on the other side of the ideological fence. And the internal emails attacking race and religion were worse. Infused with snobbery, elitism, banality and parochialism. Displayed by people who seek to lead us.
Take the guy from a leftist think tank who claimed in an email that the most "powerful elements" in the conservative movement are Catholic. Then continues, "They must be attracted to the systemic thought and severely backwards gender relations."
A caustic tone that could only be outdone by Mrs. Clinton's press aid, Jennifer Palmieri, in her response: "I imagine they think it is the most socially acceptable politically conservative religion. Their rich friends wouldn't understand if they become evangelicals."
In another, Clinton domestic policy adviser Sara Solow weighed in on an interview the New Yorker Radio Hour conducted with Black Lives Matter co-founder Alicia Garza. In response the interview, in which Garza criticized Clinton's demeanor in a meeting with Black Lives Matter activists, Solow simply answered: "yuck."
Another 2015 email entitled "Needy Latinos" reveals campaign chair Podesta urging Clinton to call former Energy Secretary Fedrico Pena, who is "close to committing but carrying some baggage." And former New Mexico Governor Bill Richardson, "notwithstanding the fact that he can be a dick."
Most damning, however, have been the emails revealing the level of cooperation between the Clinton campaign and the American media.
Chairman John Podesta throws organized dinners for journalists at his home. Debate moderator and NBC anchor John Harwood advises the Clinton Campaign on media strategy. All amid revelations of top-down, unified efforts to ignore news harmful to Hillary.
Remind anyone of a George Orwell novel?
The ramifications? Disheartening.
My sons will never inhabit a world in which journalists stifle their opinions in favor of professional objectivity. The American public -- neigh -- the global electorate will never again view the American media as an impassioned force for truth and good. Not as they once did. And a global population that depended on such a pragmatic, truth-seeking sensibility will forever be worse off.
Worst of all, the soulless, cynical, symbiotic political duopoly that runs this nation has gone to great lengths to co-opt and pervert a system that once so ably guided us. And against our better judgment, we allowed it.
In Peggy Noonan's recent column, "America's Decadent Leadership Class," she aptly summarized the issues with today's political class as follows:
"I don't know about you but when people look down on me I want them to be distinguished or outstanding in some way -- towering minds, people of exquisite sensibility or learning. Not these grubby poseurs, these people who've never had a thought but only a sensation: "Christians are backward, I saw it in a movie!" It's the big fact of American life now, isn't it? That we are patronized by our inferiors."
Depressingly, that pretty well captures it.

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