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By Art Cashin Director of Floor Operations at UBS

March 3 (King World News) - “On this day in 1877, Congress accepted the report of a special electoral commission and not a moment too soon.  And thus, the nation finally discovered who would be sworn in as President of the U.S. the very next day.

The Presidential election the previous November had been one of the most contentiously disputed in American history.  The Democrat, Samuel Tilden, the Governor of N.Y., had gotten over a quarter million more popular votes than Rutherford B. Hayes, his Republican opponent.  But to win Tilden needed 185 electoral votes.  Everyone agreed he had 184.  But nineteen more of his votes from several southern states seemed to be in dispute.  Particularly there was a problem in Florida and Oregon - wudja believe it?  Would the Republicans finally lose the White House for the first time since Lincoln?

To resolve the dispute, Congress appointed a special fifteen-man committee to resolve the dispute.  There were five from the Senate; five from the House and five from the Supreme Court.  The popular press noted there just happened to be eight Republicans and seven Democrats.  Boy, what cynics those press guys were!!

But, after careful deliberations the committee amazed critics by awarding all nineteen votes from the four different states to the Republican - Hayes.  The vote on each of the states was close -- eight to seven.  Thus, Hayes became the President, with 185 votes to Tilden's 184.  Just one more Electoral Vote than needed.

That, I believe, was the last disputed presidential election in U.S. history.  Pass the orange juice, Chad.

The stock market’s vote Friday came under some dispute late in the session but the S&P held on to close at another record close.

Geo-Politics Rains On A Friday Rally – Weaker economic data started Friday’s session in a mixed to cautious fashion.  After a few short minutes of testing, the bulls went back to work.

Over the morning, stocks moved steadily higher in moderate volume.  Here’s how I summarized it in my midday note to friends:

Reaching new S&P closing high removed a primary bear caution. 

Today, there looks to be a modicum of short covering in a thin market.  Little to no resistance.

Friday is historically the best day of the week with shorts reducing risk in front of two day's with no trading. Ukraine does not appear to be a factor in today's action.

Run rate similar to yesterday – 650/730 million shares.

(The final NYSE volume swelled to 930 million shares on the late selloff.)

Around 2:00, the Dow was up about 125 points.  The early look for the market on close orders was to the sell side and the Dow dutifully eased back to plus 97.

Then a string of rumors began to pepper the wires and chat rooms.  Russia had invaded Ukrainian air space.  Russian troops had occupied Crimean airports, and on and on.  The Ukraine, which had not been a factor in the market earlier, suddenly became one – a key factor.

As the rumors spread, stocks went into freefall.  Treasuries rallied on a flight to safety.  Regional currencies near the Ukraine imploded.

In the final thirty minutes of trading, the market on close buyers appeared to have shifted to the buy side.  And it looked large – maybe as much as $800 million on balance.  That brought some buyers back in and the Dow and S&P crept back into plus territory.

On the closing bell, a whopping 355 million shares traded.

Worthy Of Note – After some delay, the recent NYSE margin debt has been released.  The always savvy Jason Goepfert over at SentimenTrader saw some uncomfortable parallels.  Here is a bit of what he wrote:

The latest margin debt figures were released for January, showing another uptick in debt and decrease in the net worth of investors. The "available cash" for investors to withdraw is now negative $159 billion, another new record low. As a percentage of the market cap of all U.S. equities, it amounts to -0.75%, tied with February 2000 for the most extreme figure since June 1987.

Not two happy precedents.

The Ukraine – While the TV and other news reports will probably focus on troop movements and the like, traders will keep an eye on money movements.

The Russian Ruble has plunged, prompting the central bank to move to hike rates.  The Ukraine is hemorrhaging money and the banks have put a limit on withdrawals, capping them at $1500 a day.  Their central bank is rapidly running out of reserves.  It is the money that may lead to contagion. 

Consensus – U.S. and EU have no quick or easy options.  Traders, as noted, will look to monetary consequence.  Important to stick with the drill – stay wary, alert and very nimble.

© 2014 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

IMPORTANT - KWN will be releasing more interviews today.  There was a delay in publishing news items earlier today but the problem has now been resolved.

The audio interviews with Egon von Greyerz, Dr. Paul Craig Roberts, Grant Williams, Andrew Maguire, Andrew Huszar, Michael Pento, Art Cashin, Rick Rule, David Stockman, John Mauldin, Eric Sprott and Dr. Marc Faber are available now. Other recent KWN interviews include Jim Grant and Felix Zulauf -- to listen CLICK HERE.

Eric King

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