Commentary for the Week of March 8

What a joy it will be to wake up Wednesday knowing that the longest campaign in history is finally over – and with it news coverage that for many of us has become about as interesting and essential as a backed-up toilet. If I didn’t have to stay on top of this stuff in order to write about it knowledgeably, I’d tune it out completely and spend my time immersed in masterpieces of modern fiction that I’ve wanted to revisit since college: The Magic Mountain; In Search of Lost Time; The Snows of Kilimanjaro; How It Is; Tender Is the Night; Pale Fire; The Sound and the Fury. Alas, if I am going to continue to pay the bills, one leg will have to remain at least knee-deep in the tiresome, wretched muck of politics. At the moment, the top Google headline is a good indication of how desperate the newsmongers are to bring us yet one last gasp of “news” about the election at the eleventh hour:  “Votes of Independents Could Be Key”.  Um, well, yes, I hadn’t thought about that. A fresh angle!  Yeah, about as fresh as a rodent that has curled up and died behind your living room wall.   The news media never tire of telling us things we’ve either heard a hundred times before or that we never needed to hear in the first place.  Such as: Tips for Swimming in Shark Infested Waters.  “Are you ready for the first “do”? nightclub comedian Lenny Bruce used to ask.  “Get out of the water!”  “And here’s tip number two:  Try to ward off the shark with some object.  “Yeah,” quipped Bruce: “Like the stump of the other leg the shark didn’t get.” Annoying Headlines For those who have completely had it with campaign coverage, Google has

[Because this commentary has elicited such a spirited response, I'm leaving it up for at least one more day.  One point on which we probably all agree is that it'll be great to have an 18-month campaign season over with at last. RA] It would be easy for me to dismiss Obama supporters as mentally defective but for one inconvenient fact: my mother, sharp as a tack at 92, is voting for him. And so is my sister, a San Francisco attorney who is no slouch in the brains department.  I’m not sure where my brother, a municipal employee, stands, but neither am I eager to find out. There is no bridging the political gap between us, and so we simply avoid discussing politics.  The same goes for old friends, although newer ones are another matter.  One of them walked out on our dinner together in a huff when an innocuous remark I’d made about Abe Lincoln evidently bruised his self-righteously liberal, morally perfect heart . Good riddance. It is far better friends than he that I am worried about. Will they draw the line when I let slip my support for the right to bear arms, even concealed?  A few of my wife’s closest friends are unmitigated liberals, and it’s unclear how much longer we’ll be able to tiptoe around the political rough edges when we get together socially. The truce with my siblings and mother has held, but not without strain. When the latter referred to the eminently decent Mitt Romney as “a jerk,” I returned fire with an over-the-top fusillade of anti-Obama invective. That was a month ago, and we haven’t talked about the election since.  Nor do I plan to rub it in after Romney wins on Tuesday -- an outcome I believe is inevitable because

The markets will be limping badly when they open for trading on Wednesday, numbed  by the destructive power of Hurricane Sandy. The cleanup is going to take many weeks if not months, and cities up and down the East Coast will be in a daze until basic services have been restored. Pumping out the saltwater that gushed into tunnels and subways will be relatively easy compared to fixing and replacing electrical switches and components. Because New York’s subway system is very old, many of the parts that will be needed are no longer available. Of course, the trains will run again, and soon, but how smoothly is a question that looms large for those who live in, and commute to, New York City. Although it will be a while before we can know the extent of the economic damage, the markets themselves cannot but give an instant assessment when stocks start to trade Wednesday morning. The shares of property and casualty insurers are all but certain to dive, but there will be a bullish offset in stocks tied to the rebuilding effort.  The cities themselves will be under enormous financial strain to rebuild transit systems, roads and beaches, and the logistical challenge to FEMA in particular will be considerable. President Obama has promised that there will be as little red tape as possible, and there is no doubting that he intends to make good on that promise. A Keynesian’s Dream On Wall Street, pent-up demand could cause the markets to be quite volatile in the days ahead, especially because the four-day trading hiatus has occurred in the middle of the Q3 earnings season. My hunch is that the remainder of the week will see a continuation of the bearish trend in stocks, perhaps with an added kicker from the storm.

(Update, Monday, 11:25 a.m. EDT:  Most unfortunately, it now appears that the "Frankenstorm" forecast, if few other predictions we've read about in the news, will prove correct. A meteorologist on the Weather Channel  -- someone who, like me, experienced the March 1962 storm, the benchmark for destructive power visited on the Jersey Shore -- says the similarity between the two storms is clear:  extremely high tides and winds exceeding 100 knots. The kicker this time is that a hurricane AND a Nor'easter will be hitting together, probably causing spectacular destruction in my old home town and along the New Jersey coast.  Early Tuesday morning: The damage has been bad so far, but we won't know how bad until later in the day.  The hurricane caught Atlantic City squarely, flooding the island and demolishing sections of the Boardwalk, but these were fairly common occurrences when I was growing up on Absecon Island in the 1950s. From the news reports and videos I've seen so far, it doesn't look quite as bad as the March Storm of 1962.) What do these current news stories have in common: the World Series, Hurricane Sandy and Benghazi?  Answer:  Each has been covered by the news media in a way that reminds us why we trust journalists even less than we trust bankers, politicians and used-car salesmen. Recently the press has embarrassed itself with boldly mistaken predictions about the Series; courted skepticism by relentlessly hyping “Frankenstorm”;  and disgraced itself as never before by deliberately ignoring an apparent White House cover-up of the attack on America’s diplomatic mission in Libya. Let’s start with baseball’s matchup between the San Francisco Giants and the Detroit Tigers. Heavy underdogs last Wednesday when the seven-game series began, the Giants on Sunday night completed a four-game sweep of the Tigers. Days before

Mario Draghi, feather merchant to northern Europe, is once again plying his dubious trade, this time with a slick sales pitch designed to persuade Germany that he can “save” Europe with a financial scheme that makes alchemy look respectable. The challenge he faces is more ambitious than merely putting another dab of lipstick on the PIIGS.  Rather, it is like asking the Germans to press their noses to a sardine’s armpit and have them come away reassured they’ve smelled fine perfume.  In Berlin to deliver a tightly scripted speech that was intended to give Germany’s parliament political cover for doing the wrong thing, Draghi told members he was “here to listen to your views on the ECB, on the euro-area economy and on the longer vision for Europe.” Translation: “This is a stickup. Give me the money now and don’t try anything foolish, because I am desperate.”  True enough.  But will German bankers simply roll over?  In all probability yes, given Merkel’s damn-the-torpedoes determination to do what every politician must these days in order to survive – i.e., kick the can down the road for as long as possible. If and when they run up the white flag, the bankers will be surrendering more than just German treasure. For in the by-now terminally ethereal world of global finance, they are the last honest men, steeped in the agonizing lessons of the Weimar hyperinflation of 1921-23.  Now they are being asked to sanction a deal that would give Draghi the ability to create unlimited sums of digital money so that the central bank can buy the bonds of countries no longer able to pay even the interest on those bonds.  Such measures will of course have no impact on the EU’s moribund economy, especially with Germany’s unexpectedly steep slowdown threatening to

Although Apple shares have gyrated wildly this week, soaring $27 on Monday and then plummeting $18 the day after, the stock is probably just warming up for the big event later this week. Our guess is that the company will announce stellar earnings after the bell on Thursday, but that attempts to rally the stock will be overwhelmed by the bearish tide of Q3 earnings reported to date.  Earlier in the week, we had raised the prospect of a resurgent Apple pulling the broad averages higher.  However, given the relentless drumbeat of misses, warnings and dismal numbers from the likes of Google, IBM, Microsoft, GE, Caterpillar and a few other corporate biggies, it is evidently not just an earnings hiccup that investors have been discounting via two big selloffs in three days, but the onslaught of a potentially deep recession that has been in gestation since late summer.  Under the circumstances, it is probably asking too much of Apple to single-handedly buoy investors’ hopes for the remainder of the year. So what, then, of our prediction that AAPL’s performance this week will set the tone for the stock market in the months ahead?  As things stand, and notwithstanding the prospect that monster earnings will be announced, we’d be surprised if Apple shares end the week significantly higher than where they are now. The stock settled near $613 yesterday after topping at $634 intraday, but unless more such gyrations vault peaks #1 and #2 in the chart above by Friday, it’ll be a rapidly deteriorating technical picture that Apple shareholders face next week. 2500-Point Dow Plunge In an earlier commentary, we said the Dow could drop 2500 points quickly when the delusions that have long sustained the blue chip average finally gave way.  Short of the appearance of some horrific black

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[Apple shares are up $27 since this commentary went out early Monday morning. However, there was no sign that  it was having a positive effect on the stock market, since the Dow Industrials were down for most of the session and closed unchanged.  I doubt this divergence can continue for long, so either Apple returns to earth or the broad averages start showing some of that old irrational exuberance. RA] A ZeroHedge reader who goes by the handle "Kito” took me to task last week for straddling the fence. On the one hand, he observed, I have been predicting a huge Dow rally to 14969. More recently, though, in a commentary published last week and rightly seized on by Kito, I said to hell with the bullish target; with Apple, IBM and Google shares getting bludgeoned, it’s only a matter of time before the bloodshed spreads to the broad averages. So which is it, Kito has asked? Am I bullish or bearish? I dodged his question, suggesting that he “ask around the neighborhood” about my track record as a forecaster.  This was disingenuous, since it implicitly asked him to excuse my waffling merely because my subscribers would likely attest to the accuracy of my forecasts in the past. As we know, however, in the forecasting business a guru is no better than his last prediction.  With Kito’s criticism in mind, as well as the best interests of my subscribers, I’m getting off the fence this morning to offer as clear a forecast as I can  -- one that I hope will be illuminating and useful to all. Let me first say that no chartist possesses a crystal ball. Technical analysis cannot divine the future; it can only help, if combined with horse sense, in estimating the odds of various speculative

What kind of batter crowds the plate after a pitcher has aimed a fastball at his head?  “Batters” have been doing it routinely on Wall Street lately -- most recently yesterday, when they held the broad averages buoyant while Google shares were getting pasted for 80 points.  During this single-stock onslaught, the Dow Industrials were never down more than 50 points and closed off only slightly with GOOG still $53 in the hole. This wasn’t the first time bulls have leaned into the plate while “dusters” whizzed past their ears.  A day earlier, they pushed the blue chip average to a small gain while IBM was getting savaged on earnings that only somewhat exceeded analysts’ expectations.  Big Blue got schmeissed again yesterday along with Google, but the body blows that sent two corporate giants to the mat evidently weren't enough to unsettle investors. Invincible Buyers? If bulls have been acting lately like they’re invincible, perhaps it’s because they appear to have shrugged off Apple’s nasty plunge in the last month. At its recent lows near $624, the stock had shed 11% of its value – a very big hit for portfolio managers, since the company is the world’s largest by capitalization.  But so what? That seems to be the attitude on The Street, where the lotus-sniffing stewards of Other People’s Money have been curiously calm through it all.  With three absolutely crucial bellwethers falling from the sky, the Dow currently sits a mere hundred points from new recovery highs. It’s tempting to think DaBoyz are trying to fool widows and pensioners into believing things are hunky-dory while they distribute shares to the unwary by the trainload.  As we know, however, individual investors deserted the stock market years ago, leaving only sharks to feed on chum limitlessly supplied by the Federal