It's Friday, it's summer, so this recap of the events of the day and the week will be as brief as possible.
First up, the weekend's required reading is David Stockman's Abolish the FOMC, bring back the green eyeshades, in which the former Director of the Office of Management and Budget (1981–1985) under President Ronald Reagan proposes an elegant yet simple solution to the current and ongoing tyranny of central bank incompetence.
In as few words as possible, Stockman proposes that the market set interest rates, pining for the halcyon days of true price discovery. The post is well worth twenty minutes of reading.
As for stocks, globally, the week was something of a disaster, with massive falls in Asia and Europe, though there was something of a rebound on Thursday. US indices struggled though the opacity of another FOMC policy decision (nothing) and fell into a funk on Thursday morning, with the Dow dipping below the magic 17,000 mark, but magically rallying for a noticeable gain for the day.
Friday was not so euphoric, with options expiration afoot (we suspect most of the big players cashed out on Thursday), though it was somewhat dramatic, as all three majors traded in the red the entire session. The Dow actually touched down just above 17,600, keeping the magical 500-point range (to 18,000 on the upside) intact for a thirteenth consecutive week.
This particular range-bound trading pattern does have a precedent, that being the 23-week span from February to early July of last year, when the blue chip index traded generally between 17,750 to 18,250, making an all-time high in the process (mid-May).
So, despite the two semi-corrections in August of 2015 and January of this year, the Dow has now settled into a regime just 250 points below the previous plateau. Welcome to the world of paper games.
Friday was simply get-away day, aided greatly by the NY Fed, which lowered its second and third quarter estimates for GDP growth to 2.1%, which is still probably too high. With that, unless the fourth quarter is gangbusters, along with the 0.7% rate of growth for GDP in the first quarter, it will be tough for GDP to hit the 2.0% target (that's a joke, right?) for this year.
Maybe the elections will trigger a change for 2017. Maybe not.
In any case, it's too far ahead to look. Brexit vote comes up Thursday, which could trigger fireworks, though some of the smart money is saying the vote will be for the UK to stay in the EU, and it will be rigged.
S&P 500: 2,071.22, -6.77 (0.33%)
Dow: 17,675.16, -57.94 (0.33%)
NASDAQ: 4,800.34, -44.58 (0.92%)
Crude Oil 48.07 +4.03% Gold 1,296.80 -0.12% EUR/USD 1.1279 +0.46% 10-Yr Bond 1.6180 +3.45% Corn 436.25 +2.59% Copper 2.05 +0.29% Silver 17.47 -0.78% Natural Gas 2.89 +1.16% Russell 2000 1,145.11 -0.27% VIX 19.28 -0.46% BATS 1000 20,677.17 0.00% GBP/USD 1.4355 +1.03% USD/JPY 104.2060 -0.10%
For the week:
Dow: -190.31, (-1.07%)
S&P 500: -24.85 (-1.19%)
NASDAQ: -94.21 (-1.92%)