Weekend Reading: Charged With Obstruction

Tyler Durden's picture

Authored by Lance Roberts via RealInvestmentAdvice.com,

No! I am not talking about President Trump but rather the crash in both Technology stocks, and Oil prices, which are obstructing the continuation of the “bull market.” 

As I discussed this past Tuesday, the mini “flash crash” in Technology certainly woke investors up.

While there is certainly damage being wrought in the Technology and Discretionary sectors, the rotation to Financials, Energy, Small and Mid-Capitalization areas are offsetting the correctionary process. As shown below, the markets remain confined to the bullish trend currently while the overbought condition is being reduced.”

As shown in the updated chart below, despite all of the “angst” there has been relatively little price deterioration to date.

While the Nasdaq has primarily been under pressure from the unwinding of the excess in the main #FANMAG ($FB, $AAPL, $NFLX, $MSFT, $AMZN & $GOOG) stocks, as shown below, some performance pickup by small and mid-capitalization stocks, as well as emerging markets, limited portfolio damage over the last few days.

As money rotates wildly between sectors and markets, in a clear attempt to stay invested, the risk of a decoupling has risen in recent weeks. This is particularly the case if it either becomes clear Trump’s legislative agenda is not going to progress OR earnings begin to disappoint.

I believe BOTH of those outcomes are highly likely. 

First, with Trump embroiled in investigations, allegations, and general revolt, the ability to progress on legislative agendas has become markedly more difficult. However, the bigger issue is the potential disappointment in earnings expectations as sliding oil prices feed through in the next quarter. With the recent break below $45/bbl, there is a real possibility that a test of $40 is coming. 

With revenues and CapEx already suppressed, the negative feedback into earnings, expectations, and outlooks is increasing. I would expect to start seeing earnings expectations through the end of the year get trimmed back in the next couple of months. The problem, of course, is that makes the current valuation arguments that much more difficult to justify. 

That could weigh on investor’s portfolios sooner rather than later.

In the meantime, here is what I am reading this weekend.



Research / Interesting Reads

“The stock market is the story of cycles and of the human behavior that is responsible for overreactions in both directions.” – Seth Klarman

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doctor10's picture

Obstruction? In Washington DC?

Who is Seth Rich

HRClinton's picture

Tyler Durden of ZH was quoted in the Interesting Reading. 

AllOfGood's picture

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BSHJ's picture

Big rally Monday?

aloha_snakbar's picture

my dog may have an obstruction in her bowels...thinking about calling the DOJ...

cheech_wizard's picture

If I didn't know better, I'd swear every politician in Washington D.C. is suffering from "obstruction" caused by Hirschsprung disease.


Standard Disclaimer: True Story!

Cordeezy's picture

Trump's agenda could move forward if our congress was not so divided.  People act like politics is an actual sports team where Republicans cannot support a Democrat and visa versa.  It is stiflling the growth of this country, and this problem is getting worse over time.  The media spews lies to get ratings which angers people, then when the lies are revealed, the media doesn't correct their own lies just moves on to the next lie which keeps their ratings up.  






BSHJ's picture

The problem is not that 'congress is so divided'.......the problem is that the Republican (RINO) Majority refuses to take charge and enact conservative and fiscally responsible legislation.

adanata's picture

Okay... the "problem" is the whole "government" circus is THEATER. The only "majority" is The Sheeple vs all the Globalist's minions in DC acting their asses off to fool the loons living from sea to shining sea into believing there's a government instead of the tyrannical dictatorship actually in place. Combine the Patriot Act, the Military Commissions Act, the NDAA and all our imagined "rights", "freedoms" and the Constitution are effectively nullified. We're done; that game is over. Don't know what comes next but it appears there are only two ways to go...

vegas's picture

Crash in tech stocks? 5% down is a crash? Talk to me when they're down 60%+ and maybe you got a point.



Never One Roach's picture

At least the fundamentals are there......


oh, wait a second....

decentralisedscrutinizer's picture


Why waste time on this alligator when the swamp’s most critical economic and political problems revolve around the hegemony of a global corporate cartel, which is headquartered in the US because this is where their dominant military force resides. The US Constitution is therefore the “kingpin” of an all-inclusive global financial empire. These fictitious entities now own the USA and command its military infrastructure by virtue of the Federal Reserve Corporation, regulatory capture, MSM propaganda, and congressional lobbying.


The Founders had to fight a bloody Revolutionary War to win our right to incorporate as a nation – the USA. But then, for whatever reason, our Founders granted the greediest businessmen among them unrestricted corporate charters with enough potential capital & power to compete with the individual states, smaller sovereign nations, and eventually to buy out the USA itself. The only way The People can regain our sovereignty as a constitutional republic now is to severely curtail the privileges of any corporation doing business here. To remain sovereign we have to stop granting corporate charters to just any “suit” that comes along without fulfilling a defined social value in return. The "Divine Right Of Kings” should not apply to fictitious entities just because they are “Too Big To Fail”. We can't afford to privatize our Treasury to transnational banks anymore. Government must be held responsible only to the electorate, not fictitious entities; and banks must be held responsible to the government if we are ever to restore sanity, much less prosperity, to the world.


It was a loophole in our Constitution that allowed corporate charters to be so easily obtained that a swamp of corruption inevitably flooded our entire economic system. It is a swamp that can't be drained at this point because the Constitution doesn’t provide a drain. This 28th amendment is intended to install that drain so Congress can pull the plug ASAP. As a matter of political practicality we must rely on the Article 5 option to do this, for which the electorate will need overwhelming consensus beforehand. Seriously; an Article 5 Constitutional Convention is rapidly becoming our only sensible option.


This is what I think it will take to save the world; and nobody gets hurt:


28th Amendment:


Corporations are not persons in any sense of the word and shall be granted only those rights and privileges that Congress deems necessary for the well-being of the People. Congress shall provide legislation defining the terms and conditions of corporate charters according to their purpose; which shall include, but are not limited to:


1, prohibitions against any corporation; a, owning another corporation; b, becoming economically indispensable or monopolistic; or c, otherwise distorting the general economy;


2, prohibitions against any form of interference in the affairs of; a, government, b, education, c, news media; or d, healthcare, and


3, provisions for; a, the auditing of standardized, current, and transparent account books; b, the establishment of state and municipal banking; and c, civil and criminal penalties to be suffered by corporate executives for violation of the terms of a corporate charter.


Balanced Integer's picture

And what about unions and their influence in government? By your logic, if corporations are not people, neither are unions.