The Shortening Window Of 2015 And End Of Year

If anything characterizes movement in markets today, it could very well be the phrase “trimming the sails.” There are a number of reason investors and traders are cutting positions, or consolidating positions whether on upside or downside bets.

No one wants to be hanging out of a 50-story building over the holidays, which suddenly are upon us. The holidays for markets are not merely secular and religious observations that arrive with a few extra days off or shortened trading days.

Thanksgiving already begins to herald the end-of-quarter, end-of-year reckoning during which balance sheets are massaged, losses are cut, and profits are taken. Every movement is exaggerated because less trading is done and almost any significant move that normally would mean little during the rest of the year takes on significance between now and January 4^th.

Equities certainly bear this out. They are struggling with what the December 15/16 FOMC meeting will bring, although we are reasonably certain the rate hike is a done deal. The U.S. might falter in the next few days and data could guide the Federal Reserve in a different direction. But that seems unlikely.

Equities are also being nicked today by struggling crude prices.

The U.S. dollar continues its irresistible swing upward, hitting an eight-month high against the euro. The combination of rate liftoff concerns in the U.S., a slowdown in China and more stimulus spending in the European Union will most likely keep the dollar strong.

Conversely, that keeps oil prices in a choke hold regardless of seasonal or year-end sentiment. Of course, crude oil has many problems beyond currency exchange issues.

We’re compelled to repeat that middle-long-term, crude looks weak due to overproduction, overstock in storage and the threat of renewed production by non-OPEC nations should price rise. That would send the price back down drastically – possibly lower than it is now.

There was some stronger talk today that the Saudis would kick the price back up soon. The problem is that very time the Saudis imply as much, they don’t follow through and crude prices go into a faint.

"The Saudis' past promises on working for price stability has led to nothing, so it wasn't surprising there was as much disbelief as initial excitement over today's announcement," said John Kilduff, partner at New York energy hedge fund Again Capital. "But all said, they are the biggest movers in OPEC, so their statement is having a positive impact." 

What to do about gold and the other precious metals, all of which saw declines in a range running from negative 0.75% for silver to negative 4.25% for palladium. About one-fifth of the losses in the precious metals complex can be attributed to dollar strength.

A quick word on one stock today and its merger to avoid taxes... The company is Pfizer and the legal scam is to allow yourself (a huge company) to be purchased by a smaller company in a tax jurisdiction where corporate rates are lower. In this case, that entity is Ireland.

This seems smart in the short run. That is, until another, even better tax deal comes along. Then Pfizer and its new fake bride will hightail it to, say, the Seychelles or some very small country that doesn’t need a whole lot of tax revenue.

You would think that Pfizer, a member of an industry that already draws the wrath of consumers who pay outlandish amounts of money for pharmaceuticals, might have better PR sense.

Somewhere, sometime, in some form, people and companies have to pay taxes. The myth has grown up that taxes, per se, are a bad thing. That’s one of the first thoughts on the road to anarchic insolvency.

Wishing you as always, good trading,