The last time the market rallied into an Election Day ended in tears. Remember November 4, 2008? In the week before the election, the SPX rallied 150 points. It topped out on the 4th, rolled over, and made new lows:
Of course, there is a big difference this time: the economy is expanding while it was contracting sharply two years ago.
After an extensive campaign of browbeating that I began back in January, I was eventually able to shut down the “Mutual Fund Monday” propaganda on CNBC’s “Fast Money” show. However, while the mutual-fund industry is not reporting “new money in” yet, the respectable jump in the futures Sunday night could be a sign that retail investors are finally coming back into stocks. (Some research firms have already reported inflows, but I doubt that they have better data than the ICI which is only reporting a large reduction in outflows so far.) Nevertheless, I wouldn’t be surprised to see the ICI data turn positive soon, and can’t really continue to keep my boot on CNBC’s neck.
So, if the masses are coming in, are they being sucked in by the Tea Party “Miracle” just like they were by “The Messiah” back in 2008? Or is the market just continuing to advance along with earnings and the economy? After all, even a feeble expansion can produce fat profits given our “modern” sweatshop production system. Speaking of which…
In this superb Australian video, you can see the Chinese workers (mostly women) who are sacrificing their health handling the toxic chemicals that shave a few cents off of the price of your iPad. And you can also see the dictatorial face of the Chinese communist regime. Whether or not the villagers in the video have a legitimate case, those officials were trying to discover who they should persecute when they asked the journalist who told him about the village. Can you imagine the officials in your town doing that? Not if you live in a civilized nation. The arms embargo that the European Union slapped on China after Tienanmen Square still strikes me as a good idea. There ain’t nothin’ warm and fuzzy about the regime in Beijing.
In his “Stop Trading” segment on CNBC Friday afternoon, Jim Cramer raved like a lunatic about the “genius” of Corporate America and all the fantastic profits it is producing. But really, now smart do you have to be to pack up a factory, load it onto a Kansas City Southern train, ship it down to Mexico, re-assemble it, and then staff it with workers making a tenth, or less, than your previous employees? Genius schmenius.