International Forecaster Weekly

Trading the Election

We could see huge draw downs, and equally huge explosions to the upside. Unless you’re a very nimble trader, sitting it out could be your best play. Just sayin…

Bob Rinear | September 15, 2020

I don’t know how many of you are active investors. I don’t know if you are active traders, or just happen to read our articles to get a sense of what’s happening behind the scenes.

But for me, trading isn’t an abstract. It’s put food on my family’s table for almost 30 years. Sure, it’s nice to sell a subscription now and then, but ultimately, it’s beating the market that keeps the lights on.

So, we should talk about trading in the face of the environment we face. For years now, the Feds have been printing money and dumping interest rates. They’ve now started buying corporate debt. They’re doing anything they can to keep the wheels from coming off the global economy, while at the same time stealthily merging themselves with corporate America. So, unless you’re one of a very small and select segments of the market, your company is in trouble. If you’re not AMZN, or TSLA, or Docusign, or Netlix, chances are your company is sucking wind.

I can throw out all sorts of ugly factlets (which most people think should be replaced with factoid) that show how ugly things truly are out there. This isn’t just because of the covid lockdown, the world’s economy has been struggling since the 2008/09 crash. We never recovered from that event. The Covid madness just makes it worse.

With that in mind, we can say with great certainty that the only reason the market is as high as it is, is because the BOJ, The Federal Reserve, the ECB, the Swiss National bank, and a dozen other central bankers, have flooded the world with yen, and dollars and Lira, and Francs, and you name it, to keep the worlds economies chugging.

So, if that’s true and it absolutely is, what’s the plan? Well in my estimation, the plan is to keep goosing the markets, and keeping the plates in the air, until they are absolutely ready for their “great reset.” Now, I’ve been talking about an economic reset for literally 10 years now. And, they’ve been working on it seriously for the past decade. If you go to the World Economic Forum’s web site and click “agenda” the big bold words “The Great Reset” come up. So, a global reset of how business is done, how we deal with the environment, what our “money” looks like, etc is all going to change if they get their way.

My feelings aren’t mainstream. I’m as far from mainstream as it gets. But I do enough research to know I’m usually pretty close to what’s going on. Most people that at least have the ability to entertain alternative concepts, generally think that the Fed’s have “painted themselves into a box” meaning that they goofed up, and now they have to keep printing and keeping rates low or we crash. Where I differ is that this was NOT by accident. Central bankers aren’t stupid, they’re simply evil.

Over the years, I’ve stated too many times that the Central banks can’t be blamed for anything bad happening. JOB ONE for a central bank has nothing to do with mandating full employment and controlled inflation. That’s just the cover story. JOB ONE at the central bank, is to ALWAYS be a central bank. To always control the monetary policy. To always be the lender and buyer of last resort. That is job one. Everything else is fluff, to keep the average person buffaloed.

Just to be clear, the Central Banks run the world, despite them trying like hell to disguise that fact. They want to be looked at as your local humble neighborhood banker, that’s always looking out for you. Higher piles of BS could never be created.

So, on the surface, this market stuff should be fairly easy. The Feds are going to keep printing, keep interest rates low, and “X” amount of their fairy dust money will go straight to Wall Street banks and hedge funds, which will employ that money in the market. This too, is NOT by accident. The Feds know that 90% of the pension funds are busted. They know the Average American can’t find 400 bucks for an emergency. They also know that they cannot create a rising economy, but they can create a rising equities market. And they have. To keep the crowds away from pitchforks and torches marching into Fed headquarters, they’ve kept their 401K’s filled, they’ve kept the illusion that things are just fine, no worries.

Now, with that in mind, it should be simple to say “okay, so they’re going to print and print, and keep sucking up corporate debt until they own a chunk of every major business there is, and keep the market ever rising, to give the peon’s the illusion that things are really okay. Therefore the simple answer is to just stay long the market, and buy every dip. Until their reset is ready to be launched, I don’t think there’s any other choice.

Consider covid. Now, we can get into a 2 hour long discussion about who made this crap, who let it go, who’s behind it all, what the agenda is, etc. But that’s for a different day. For today, put yourself in the Feds shoes for a minute. You have a nation barely functioning economically for 9 years, and then terribly crippled by a virus ( Actually by nefarious people that want to crush our economy and blame Trump) and you, “the worlds greatest central bank” has a choice. It either puts the pedal to the metal and prints like drunken sailors, or it allows the markets to melt down. It allows the economy to grind to an absolute halt.

If the market melts down, and the economy crashes WITH a central bank, then why the hell do we need one? The clamor to get rid of those clowns and go back to a gold standard would be deafening. So, the Federal Reserve pretty much has to continue to print, despite the debt levels, despite anything. If they don’t print, we CRASH. If we crash, the cries to get rid of them will ring out from the highest pulpits. So, they’ll print.

Again, the logic then says, buy every dip, get as long as you can get, because we’re going higher. Until they stop printing, this market will only go up. Why? Where else is money going to go? In 10 year’s paying 0.62%??? In CD’s paying 0.80%? They have engineered this to make sure there’s no other place to park your money and get a return other than equities.

But it turns out, it’s not that easy. On November 3, we’re going to have the most epic, and in my estimation, most important election in the history of the United States. Strong words, yes, and I mean every one of them. This is the election which determines if we’re going to be a socialist nation, or try and hold onto some semblance of what made America the Greatest nation the earth ever saw, despite its many flaws.

Which brings up Mr. Market. If this election gets as ugly as it could get, if it is contested by both parties into perpetuity, if the riots, looting, shooting, demonstrations, cop killing, etc escalates, does money still flow into the stock markets? Or at that point, are things so ugly that they return to the safety of bonds, with the idea being they’d be more interested in a return OF their money, than a return ON their money??

That’s a good question folks. Right now, the markets are putting on a show of bravado. In the face of BLM madness, in the face of the riots, in the face of COVID, it has continued to put its fingers in its ears and yell LA la la la la la so it doesn’t hear about all this stuff. But it knows it’s there, and is ignoring it. For now.

I just did a Radio show Sunday, where the host and I discussed the election. By all accounts, it actually looks like the left is throwing this election. How else can you explain them pushing Biden, who let’s face it is mentally deteriorating. How else can you explain Biden and Harris NOT standing up against the riots and destruction? How else can you explain them openly backing socialists?

But if that’s true, why? Why would they toss the election? Could it be that they know the “great reset” is soon to be upon us, and they want Trump in office when the SHTF? Could it be that they’re so aligned with the worlds central bankers ( whom are all globalists) they know that the reset is planned for say 2022, and don’t want to be in charge of things when we see the central banks “pull the plug” and force us into their new digital currency? It could be.

My point however is that IF there was no election coming in 50 days, I’d still suggest you buy every dip, and lean really long, because the Feds are going to continue to jam this thing higher and higher. Especially if we start getting reports of the dreaded “second wave” along with the seasonal flu.

But there is an election coming, a big one. Now, I’m on record saying that Trump is going to win this election in landslide manner. I believe that most Americans have had it up to their necks with the AOC’s, the Bernies, the push to Socialism, and want NO part of it. Consider the “Cubans and Latino’s for Trump”. They’re becoming very vocal for Trump. Why? They have LIVED through the socialism of Cuba, the socialism of Venezuela and they want NO part of it. To quote one Latino woman “I fled socialism to come to the US, I don’t want it here!!”

So, I believe that even with their mail in voting fraud, and Hillary suggesting Biden never accepts defeat, I think Trump wins in crushing fashion. IF that’s true, then I think the markets continue higher until the fateful day of the reset. But what if it’s a drawn out protracted mess? What if we get to January and there’s no winner? Again are the markets okay with that?

What about if Biden somehow pulls off the win? Is the market going to like his tax plan that raises taxes by 4 trillion? Are they going to like the environmental regulations they will implement on companies, are they going to enjoy the gutting of the oil sector, the coal sector?

Basically there’s still enough people in the markets that don’t like uncertainty. Well, we’re approaching a period of uncertainty that’s probably unprecedented in market history. Let me clarify that a bit. There’s a lot of people that think investors are stupid and “one day” they’re going to find out that the Feds are debasing our currency and they’re going to head for the exits. Some think that the Chinese are just awakening to this debasing and that’s why they’re dumping dollars and buying commodities.

China knows what the Feds have been doing. The people buying TSLA at 3000 dollars knows what the Feds have been doing. The Wall Street talking heads know what the Feds have been doing. There’s NOT going to be some “aha!” moment when everyone wakes up and says “hey, I have to sell my stocks because look… the Feds have been debasing our currency by printing more of it!” Sorry folks. Everyone knows the game. China’s not stupid. Wall Street isn’t stupid.

The uncertainty comes in concerning sustainability. How long will the central banks keep the printing going? Will a contested Presidency give them the cover to say “hey, we’re not going to keep interest rates this low any more?” If Biden wins, do they say “hey, we’re ending the program of what ever it takes?”

Wrap it all up and the bottom line is that this election certainly has the ability to pop the biggest asset bubble the world ever saw. Or…it could just push them to keep up with their scheme until reset time.

With all that in mind, how do we play it? As an investor, or even as a trader, do you simply let things ride through the storm? Or do you approach this a bit differently? I’m not sure there’s a good answer, because I am sure we’ve never seen this level of hate, vitriol, division, and violence before.

You could get cute, and try and play some form of straddles, where you buy some calls and puts on the big index ETF’s such as the SPY, the DIA and the QQQ’s. The concept being that which ever way the market breaks, it will move far enough that the income on your call or put, will exceed the loss on the other side of the trade.

But I’m not that desperate. Some times the best play is no play and for me, I probably will find my self in cash the week of the election. Well that’s easy for me, I manage my own book. What about the folks in their 401K’s? That’s a tougher nut to crack. Some 401K’s are pretty restrictive as to how many times you can move your holdings. But for me, IF I had a 401k, I would move half of my holdings into cash, which actually in a 401K is a money market. I’d think about it like this; even if I’m only allowed to move money once a quarter, by moving half my holdings to cash, if the market does continue up through the post election, I’d still have skin in the game, and if it doesn’t and instead falls, I’ve only got half my egg exposed.

There’s a good chance that the markets will be insanely volatile after the election, as mail in votes delay the outcome. We could see huge draw downs, and equally huge explosions to the upside. Unless you’re a very nimble trader, sitting it out could be your best play. Just sayin…