Stock Market Selloff

Stock Market Selloff

Will a Potential Biden Win Launch Big Market Selloff in October?

A report by CNBC raises the possibility of a Biden/Democrat induced selloff in the stock markets in October.  Are recent selloffs a practice run for the real crash event ahead?

It’s likely another ploy by Democrat media to desensitize issues that are significant factors in the upcoming elections. The real matter they’re hinting at is a Biden induced recession in 2021.

 

With President Trump, the agenda is very clear — pro-American, business-friendly, and high US employment. With Biden, an attempt to reopen and support the China supply chain, higher taxes, and deficit spending paints a dour picture for 2021.

Screenshot courtesy of Wikipedia and Gage Skidmore.

Biden Playing Possum While Media Feeds the Believers

Biden and the Democrats have been trying to downplay their agenda of higher taxes and opening up borders to predatory foreign exporters.  They’re playing up globalism as providing a stimulative effect, while American business would obviously be crushed again should that happen.

After Nancy Pelosi said they would cancel Joe’s participation in the Presidential debates, it looks like they’ve had to change their minds. The first debate is tomorrow night, and could be key to how investors react. It’s a nervous time for Joe, who obviously has to skirt the tax and China topics.

 

Small business formation hit its lowest levels ever at the end of Obama’s regime, so it would appear Biden would take the US back to that darkness.

As part of his $4 trillion tax plan, Biden has proposed increasing the top tax rate for capital gains for the highest earners to 39.6% from 23.8%, the largest real increase in capital gains rates in history. Economic analyses show that capital gains tax hikes cause a burst of stock-selling in advance of the increase, as investors look to lock in the lower existing tax rates before they rise. — CNBC news article

Another post talks about Biden spending on infrastructure, but he was in office 8 years with Obama and spent nothing on American infrastructure improvement.  With all the debt floating around, it’s hard to see how Biden could get trillions for infrastructure at the same time as US businesses are crashing. How will these failing businesses pay their taxes?

With the Democrats delaying quick stimulus aid for workers and business, the selloff might be a sure thing.  So many shutdown businesses need help right now. It was the Democrats who called for shutdowns in the first place. Investors and wealthy billionaires alike aren’t blind to this hypocrisy. You can bet they’re analyzing these series of selloffs and strategizing their market departure.

Shutting Down US Energy

If Biden shuts down the US oil industry (fracking and exploration), it could ruin up to one million well-paying jobs in a country that desperately needs jobs and economic activity. Higher gasoline prices and more imported oil from the middle east would be additional pains.

Investors have already a couple of selloff events, but the big selloff sometime in October could be very much a stock market crash. The more the media pushes a Biden win, the more fearful stock market investors will become.

At some point in October, if it does look like Biden could win, investors will divest and get right out of equities.

With Corona Virus cases increasing, 13.6 million unemployed, and Joe mentioning tax increases, the wealthy especially will spirit their cash out of the country into other currencies. They’ll sell their US stocks before the big slide starts. That will start the crash. The US dollar forecast depends on the election outcome.

Few commentators seemed able to understand the selloff last week.  They were miffed at no technical indicators and just fluffed it off as a typical fall season profit taking.  But what’s coming isn’t profit-taking, it’s investors protecting their precious savings.

 

The election in 6 weeks may produce a stock market crash in 2021. While the Fed promises no interest rate increases, the Democrats have their own ideas about that. They may well see a benefit in raising rates. And let’s face it, rising mortgage rates will lead to foreclosures, especially as the stock market plummets.

In a recession, we may even see a housing market crash. Housing is vastly overpriced and banks would retract loans for new mortgage applicants. They remember 2007.

 

The Big Market Mystery Drop:  The Dow is down 1000 points in the last 2 days, while the NASDAQ has plummeted 900 points. This is definitely a big sell off with even the big name stocks such as Google, Facebook, Tesla and Apple all diving in unison.

 

Grasping in the Dark for Answers

There’s nothing worse for stock market advisors or investors when drastic market changes occur for no visible reason.

 

Is this just speculators or is a big trend about to be revealed? Stock market experts are saying strangely, that investors shouldn’t worry too much, that this too shall pass. But normally, they’re a pessimistic lot.

Yesterday, stock market experts and economists struggled to grasp what’s happening. It’s hard to believe they be so far from the source when they’re armed with all the data and historic indicators too.

Wrong Guesses

One top fund manager talked about the weak jobs report yesterday, but today’s jobs report was outstanding. And yet, the markets are continuing their plummet further, so it has little to do with jobs, unless investors are skittish about a strong US recovery with strong US manufacturing numbers growing?  Meaning — they want US consumers sales, but not “made in America” production. All theory at this juncture.

 

 

The experts are struggling to comprehend this event, and I doubt the AI prediction algorithms would have the foggiest idea of what is happening. This likely is an emotion induced event, but whose emotions are striking the sell switch, is the real question?

Certainly, the NYSE and NASDAQ executives likely know who started this landslide. The NASDAQ is the index that leads this sell off correction so we’d be wise to focus in on Silicon Valley’s specific view of what’s happening.

Here’s Portfolio Wealth Advisors President & CIO Lee Munson discussing the technical and psychological elements affecting this sell off.

Good News Seems to Be Bad News?

And today’s excellent jobs report only worsened the mood of investors. Instead of reacting with joy, the tech sector is responding with decided negativity at recent events.

 

 

Items in the news that might be key agents in the stock market mini crash include:

  • predicted profit taking blip has turned into a landslide event
  • someone is behind the sell off and is orchestrating a continuous slide
  • early September might be interpreted by investment companies and AI stock prediction software as a good time to get out of the stock market
  • Barron’s reports that earnings at cloud service companies are falling and it’s infecting everything downstream in the tech world
  • Attorney General Barr’s delight at eliminating China’s confucius spy ring in the Universities (hard to believe America would allow China to sponsor that many American universities and get first hand access to research data and tech trends).
  • relations with China continue to worsen
  • manufacturing repatriation to the US is picking up steam
  • stimulus package and executive order from President Trump seems troubled
  • signs and fears of a fall Covid 19 outbreak are steepening
  • Attorney General Barr is fast tracking prosecution of Google in the anti-trust/monopoly investigation
    China is threatening to dump US treasury securities
  • market is volatility and its a reaction to overbuying and inflated stock values, which can lose favor by speculators at any time.
  • news about successful vaccines and timelines for vaccination has grown indicating the pandemic is coming to an end in 2021

Let’s return to this event next week as more information is leaked out about traders and market activity.

 

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There is 1 comment for this article
  1. william at 1:38 am

    The sell off was a last gasp attempt by Central Bankers who do not want Trump. They are trying to ‘incite’ a bigger sell of before the election.
    It wont work. Nothing will stop a trump victory at this point and the markets are poised to do very well over the next 4 years but also to continue to hurt Central Banks and the Fed.
    Enjoy the ride.

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