One of the good things about traveling is one gets the chance to read, think, and reflect on events that have taken place. To that point, while traveling last week I had the chance to read the transcript of ex-FBI director Comey’s testimony to the Senate intel committee; if I was him I would be retaining a defense attorney! As for the stock market’s reaction to said testimony, stocks marginally fell as Comey’s testimony began, but then rallied as he testified President Trump did not attempt to stop the Russia investigation and that Loretta Lynch had pressured him to lie in regards to the Hillary Clinton email server investigation. Some of the striking lines from Comey’s testimony were: 1) "Did any individual working for this administration’s ask you to stop the Russian investigation?" Comey: "No;" 2) (Loretta Lynch) "instructed me not to call (the Hillary email case) an investigation – she instructed me to call it a matter;" 3) Comey says decisions around the Clinton email probe were influenced in part by AG Lynch’s tarmac meeting with Bill Clinton; 4) The White House attacks on the FBI and Comey were “lies, plain and simple;” and the list goes on. Alan Dershowitz responded: “Comey confirms that I'm right – and all the Democratic commentators are wrong!”
Following Comey’s testimony President Trump’s attorney (Kasowitz) stated:
Today, Mr. Comey admitted that he unilaterally and surreptitiously made unauthorized disclosures to the press of privileged communications with the President. The leaks of this privileged information began no later than March 2017 when friends of Mr. Comey have stated he disclosed to them the conversations he had with the President during their January 27, 2017 dinner and February 14, 2017 White House meeting. Today, Mr. Comey admitted that he leaked to friends his purported memos of these privileged conversations, one of which he testified was classified. He also testified that immediately after he was terminated he authorized his friends to leak the contents of these memos to the press in order to "prompt the appointment of a special counsel.” . . . We will leave it the appropriate authorities to determine whether these leaks should be investigated along with all those others being investigated . . .
Given those events, stocks surged around midday when Comey admitted he had orchestrated a leak to The New York Times in an attempt to procure the appointment of a special prosecutor, which clearly taints Mueller’s investigation. That caused one savvy seer to lament, “What a mess!” Following the completion of his testimony, stocks fell again, but then the last hour manipulators showed up, leaving the senior index better by nearly 90 points on the closing bell. So, the flat line strategy worked for four sessions last week versus three sessions the week before. Yet the fact of the matter is the S&P 500 (SPX/2431.77) was trading around 2420 on May 25 and at last Friday’s low was changing hands around 2416, so the flat line strategy has been a pretty decent call. The flat lining, however, should end this week with a jittery market into the Fed’s Tuesday/Wednesday confab. As I write, the futures are pricing in a nearly 100% chance of a rate hike, so that is likely already baked into the market at this point. Following Yellen’s Wednesday press conference, the new energy mix should take over and subsequently dictate the near-term direction of the various markets. Andrew and I think it will likely be on the upside.