ELAM: Market soars, mood is mixed

The House of Representatives cannot pass legislation or hold onto a Speaker but it’s getting good at impeaching Presidents.

Kim Strassel, Potomac Watch WSJ

Negative mood is exclusionary, in politics it is often the voters in mass saying throw the bums out. In Congress it is now the same thing.

From the adoption of the Constitution, June 21, 1788 to 1998, there was only one impeachment. Andrew Johnson was the subject post-Civil War and was found not guilty. A full 210 years would pass from 1788 to 1998 when Bill Clinton was impeached. Bad idea, the Republicans did not have the votes. But payback is inevitable. The Democrats impeached Trump (recall Nancy Pelosi screeching he will be impeached!) twice to a not guilty outcome. Now an impeachment inquiry, not the same thing, has passed the vote on Joe Biden. The Republicans tried to impeach Homeland Security’s Alejandro Mayorkas. The motion failed 209-201.

That is three impeachments in twenty years, one inquiry, and one failure.

This political polarization is an echo of the high of 1972 and subsequent sell-off of 1973-74. Just mentioning that an all-time high is just that.

The DJIA has made a new high as it did in 1972. Last week we did expect prices to remain high through the month of December. The 500 point day in the DJIA was more than expected but that is social mood for you. But the trend in mood is not favorable for the so-called new bull market. Bull markets begin amid doubt as in 1948 and 1982. This market is over the top brimming with positive mood and is 36,000 points higher than in 1982. The open season on Ivy League Presidents is just another verse of the same song.

And now a bit of Christmas cheer. The leaders, ExxonMobil and Chevron have been in downtrends since late September. Chevron has been trending sideways and Exxon is trying to bottom. While the trend cannot be said to have reversed, there are positive signs of both trying to put in a bottom. The same can be said for ConocoPhillips and Apache.

Gasoline futures confirm with a big jump Thursday. From a daily low of $2.05, the close was $2.13, a penny below the daily high. Heating oil is oversold to the downside and at least made an up move Thursday.

For now the magnificent seven tech stocks leading this rally remain strong. Energy is trying to bottom. Interest rates have declined on the longer maturities but not on the short end. Three-month Treasury bills are still yielding 5.25%, well above the ten year note at 3.935%. The Fed would do better to quiet down and let the markets speak.