Thursday, September 29, 2016

Stocks Slip In Afternoon Trading; Where's The Window Dressing?

Stocks continued their up-and-down action on Thursday, posting one of the larger losses of the season, something that's becoming more and more commonplace as the election nears.

Perhaps investors and speculators are playing a game of chicken, day-trading on quick profits (a likely scenario), or perhaps more are coming to the realization that all is not well in the US or global economy and shocks such as experienced by the recent Brexit vote could contribute to more disorder.

The Commerce Department today announced the third and final estimate for second quarter GDP, a disappointing 1.4%, another reminder that the economy is not picking up any steam and may be stuck in a semi-permanent state of stagnation and denial, with outright deflation lurking at every turn.

The reality of the situation is that Americans seem fairly content with the way things are economically, at least on the surface. However, good-paying, long-lasting jobs and careers are harder and harder to come by and what used to be fixed costs, such as utility bills, property taxes, and other fees for services (think health care) continue to ratchet higher in cost on an annual basis.

Also of concern are diminishing corporate profits, which have been heading south for the better part of two years. It's simply more difficult in a tight economy to wring out better and higher EPS and bottom line profits.

Market analysis being a somewhat difficult and thankless task, those are at least some of the potential catalysts for today's declines on the major indices. Tomorrow being the final day of the month and the quarter, one should be looking for "window dressing," wherein fund managers buy up stocks seemingly in favor to add to the portfolio and prospectus. Oddly enough, we may be witnessing window shading instead, as fund managers shed stocks that are under-performing, currently about 65% of the market.

With only a few key stocks keeping the averages afloat, the time for a major pullback has probably long past, since the Fed continues to prop up the market with its easy money.

Thursday Tumble:
Dow Jones Industrial Average
18,143.45, -195.79 (-1.07%)

5,269.15, -49.39 (-0.93%)

S&P 500
2,151.13, -20.24 (-0.93%)

NYSE Composite
10,643.48, -109.97 (-1.02%)

Tuesday, September 27, 2016

Presidential Debate Past; Stocks Return To Normal

With the results of Monday night's presidential debate clearly a mainstream victory for Hillary Clinton (according to the mainstream media, naturally), investors got the "all clear" Tuesday morning and immediately set about erasing the previous day's losses to a large extent.

There was nothing of note in the way of financial news, so the political news would have to suffice, and it apparently did.

With nothing now standing in the way of a Hillary Clinton victory in the November election, the smug Wall Street crowd felt good enough to boost stock prices for the average investor, despite Donald Trump's warning that the Fed was blowing bubbles and playing politics. Maybe the election doesn't matter that much.

All's well.

Tuesday's Shuffle
Dow Jones Industrial Average
18,228.30, +133.47 (0.74%)

5,305.71, +48.22 (0.92%)

S&P 500
2,159.93, +13.83 (0.64%)

NYSE Composite
10,657.18, +32.30 (0.30%)

Monday, September 26, 2016

Stocks Slide Again; Is Market Anticipating A Trump Victory Or Government Shutdown?

Stocks fell for the second straight session, extending losses from Friday to open the new week.

Causes for the two-day selling spree are questionable, but Monday's New Home Sales release by the Commerce Department may be a good place to start. After surging in July, new home sales fell 7.6% nationally, following a July surge.

Perhaps even more troubling is that the median price of a new home sold in August was down 3.1% from July and down 5.3% from a year earlier.

That's a real problem because the home-selling business has been anything but brisk, though price increases were a good sign for the Federal Reserve, which is dying to find any hint of inflation (they love it; consumers hate it). Thus, if new homes are selling at a discount from the year earlier, one could probably safely assume that existing homes are seeing price pressure to the downside as well.

Extrapolating from what is normally regarded as the biggest single purchase in a person's life, the cost of a home (or rent) going lower is going to put the brakes on inflation in a very large way, perhaps in a way that many people looking to sell are not going to appreciate. Recall that the last housing bust was a scant eight years ago. There are still underwater homeowners in various stages of despair, though the numbers have eased significantly over the years.

A downturn in housing prices, while great for new buyers, are overall anathema for the economy. How that squares with Wall Street's ongoing love-hate affair with the Fed and the call for higher interest rates is as yet unknown, but, after last week's stall on raising rates there's the distinct possibility that the Fed has called the market's bluff for the final time.

A FOMC meeting is sceduled for the first week in November, just prior to the election, so there's almost zero probability that the Fed would raise rates at that point, upsetting not just the market but the political class as well. That leaves December as the last chance for the Fed to raise rates, and looking back at their last December hike (a market disaster), there's some thinking that the almighty Fed may not want to repeat that particular episode.

One other potentiality for the sudden downturn in stocks is that inside money is looking seriously at a Donald Trump victory in November. Tonight's first debate (of three) between the Donald and Hillary Clinton may be a watershed moment in US political history. The most recent polls have the two candidates nearly even, as Mr. Trump has eviscerated Clinton's large post-convention lead, especially in some key battleground states such as Ohio, Pennsylvania, and Florida.

Why large investors may be nervous about a Trump victory is the gnawing, belly-aching suspicion that Trump may be good for small business but bad for big business. His platform is not well-formed, but, he has used the words "crony capitalism" to his populist advantage. It's code for "no more business as usual" which means many of the larger firms (think S&P 500) that have benefited from decades of competition-crushing regulations and legislation may be looking at a more level playing field which puts small businesses on a better footing, something with which they have no relevant experience. That opens up new possibilities that favor smaller competitors taking market share from larger ones, to the ultimate detriment of the US stock market, but probably to the betterment of the overall economy.

Not withstanding any other reasons to fear a Trump presidency, the elitists on Wall Street and in the nation's capitol simply do not know what to expect. That's why they're the status quo and Donald Trump spells big danger.

Another rationale for a market downturn is the continuing drama over keeping the federal government operating past this coming Friday. The president and congress are doing their usual dance of death surrounding a continuing resolution rater than an actual budget to avoid a government shutdown and the Friday deadline is looming large.

Lastly, this being the last week of September, maybe the marketeers are gearing up for an October to remember, as has occurred on numerous occasions in the past. Market crashes and corrections always seem to pop up in the harvest month, and this one offers even more uncertainty than usual.

Blue Monday:
Dow Jones Industrial Average
18,094.83, -166.62 (-0.91%)

5,257.49, -48.26 (-0.91%)

S&P 500
2,146.10, -18.59 (-0.86%)

NYSE Composite
10,624.88, -93.11 (-0.87%)

Saturday, September 24, 2016

Fed Holds, Market Stuck; Donald Trump A Viable Alternative

The stage is set for the presidential election and the Fed will try its best to not influence it (that is, unless Hillary Clinton is losing).

At its most recent meeting - which ended this past Wednesday with the usual "no change" announcement - the FOMC decided that there wasn't enough positive economic data to support raising rates, despite record low unemployment according to official sources.

Thise in the know understand that the Fed cannot and will not (the next meeting is scheduled for November 1-2) raise interest rates prior to the election (November 8) because any increase, such as the lonesome one of 0.25% back in December of last year, would cause a market panic and sharp selloff of stocks.

The condition is asinine, akin to preparing a race horse for racing and then continually scratching the nag before the event.

Members of the Fed continue to jawbone about raising rates, which keeps their fragile authority intact. The truth is that they lost control back in 2008, and have done nothing to retain or repair the confidence of the populace, though, due to normalcy bias, everybody keeps using fiat money and going along for the zero interest rate ride for the time being.

These policies cannot last forever, thus it may become fashionable and even predictable to vote for Donald Trump in the upcoming election. Trump is a change agent, one feared in the halls of congress, statehouses and even in the conference rooms of the Fed's Eccles building.

Stocks are overpriced because there is no alternative for many large investors, and that's a danger.

So, get ready for a rocky road ahead. The first presidential debate is Monday, and that event could change the dynamics for November and the immediate future.

Stay tuned and stay liquid.

Friday's Closing Prices:
Dow Jones Industrial Average
18,261.45, -131.01 (-0.71%)

5,305.75, -33.78 (-0.63%)

S&P 500
2,164.69, -12.49 (-0.57%)

NYSE Composite
10,717.99, -75.67 (-0.70%)

The week:
Dow: +137.65 (0.76%)
NASDAQ: +61.18 (1.17%)
S&P 500: +25.53 (1.19%)
NYSE Composite: +185.72 (1.76)

Wednesday, September 21, 2016

Fed Holds Rates Steady; Nothing To See Here

As expected, the Fed holds the federal funds overnight rate at 0.25-0.50%.

Since this was a foregone conclusion, there's little need to mention the market reaction, which, as always, was BUY! BUY! BUY!

It's a little bit sick, this interest rate game. Money Daily will have more on this in coming days.

Tuesday, September 20, 2016

Markets Brace For FOMC Nothing-Burger

Just in case you're keeping score at home, stocks remain in caution mode prior to the FOMC rate policy announcement due out tomorrow at 2:00 pm EDT.

Consensus sentiment is that the governors will do what they've done at every meeting except one since the end of 2008... nothing.

Federal funds rate will likely remain at 0.25-0.50, or effectively zero, and the financial world will once again be treated to the numb mumbling and vague interpretations of data by Chairwoman Janet Yellen at a press conference a half hour after the announcement.

This is all nonsense, all for show, and all for naught. Any attempt at "normalization" (as the Fed likes to put it) will send the interest on US debt to astronomical levels, upsetting the entire global financial universe.

It is precisely why the Fed and other central banks cannot raise rates, or, if they somehow choose to do so, it will be a gradual, drawn out process, because the unwinding of 5, 7, 10, and 30-year notes and bonds will take that many years. Unless the Fed intends to bankrupt all existing nation-states - always a possibility - interest rate increases will be gradual, if at all. The central banks have no way out of the mess they've created, except by creating another, even worse mess.

Tomorrow, like today and the day before, will be nothing but a dog-and-pony show, and a bad one at that.

Nothing even close to important will occur prior to the November elections. The Fed and their buddies are hoping that Hillary Clinton remains alive long enough to win and then, last until January 20, when she will supposedly assume the throne of president of the United States of America.

Those are two possibilities that fewer and fewer people are putting on hard money. There is one good future for the USA, and it does not include a Clinton presidency.

Tuesday's Close:
Dow 30
18,129.96, +9.79 (0.05%)

5,241.35, +6.33 (0.12%)

S&P 500
2,139.76, +0.64 (0.03%)

10,573.98, +9.68 (0.09%)

Friday, September 16, 2016

Confusion Reigns In Advance Of FOMC Interest Rate Meeting

Depending upon your individual point of view, Friday's trading was either remarkable or expected.

Following Thursday's ramp-up on news that retail sales were still slumping - leading many to believe the Fed would not dare raise rates next week - stocks opened the day in the red and remained there.

This being a triple-or-quad witching options expiration day, the downdraft could signify many things, but mostly that traders had done their best to capitalize on Thursday, before the rush to close out positions.

That's the most reliable explanation for Friday's fumble, though hardly one adequate enough.

The week ending on a downbeat means little, except that there was some selling in the face of uncertainty over the weekend and leading up to the FOMC meeting Tuesday and Wednesday.

Despite the considerable volatility in play, Dow and S&P stocks ended the week roughly where they began, the NASDAQ was ahead by more than two percent, with the NYSE Composite three-quarters of a percent lower, leaving everyone equally confused.

Betting types will be putting their money on the Fed leaving rates unchanged at the upcoming meeting, not wanting to damage the chances for Hillary Clinton any further than the candidate has done so herself.

Friday's Close:
Dow Jones Industrial Average
18,123.80, -88.68 (-0.49%)

5,244.57, -5.12 (-0.10%)

S&P 500
2,139.16, -8.10 (-0.38%)

NYSE Composite
10,529.83, -73.11 (-0.69%)

For the Week:
Dow: +38.35 (0.25%)
NASDAQ: +118.66 (2.31%)
S&P 500: +11.35 (0.53%)
NYSE Composite: -80.00 (-0.76%)

Wednesday, September 14, 2016

Back To School Not For All; Trump Surges

Well, it's still summer for those of us who go by the calendar rather than a Labor Day or back-to-school regimen.

Actually, most of us hated school, didn't we? And work isn't much better, so... retirement?

Good luck with that.

In any case, stocks are confused, but oil dipped to its lowest level in weeks, which should set firre to the bears' feet. They'll be coming out of summer slumber soon enough to catch another downdraft is our guess, even though the Fed dare not raise the federal funds rate next week.

The likelihood of a Trump presidency grows larger with each passing day, which is enough to cause serious sickness across the investing spectrum, although his victory will prove a dynamic positive in the long run.

It's the short term that scares most people.

Wednesday's Woes:
Dow Jones Industrial Average
18,034.77, -31.98 (-0.18%)

5,173.77, 18.52 (0.36%)

S&P 500
2,125.77, -1.25 (-0.06%)

NYSE Composite
10,511.54, -23.82 (-0.23%)

Tuesday, September 13, 2016

Volatility Returns As Stocks Retrace Friday's Losses

Writing just after noon on Tuesday, stocks seem to be in a certain funk over the future of not just corporate earnings, but the direction of the Federal Reserve and the outcome of the 2016 presidential race.

On the latter, Hillary Clinton's continued lying (even about her health, which is in terrible condition) may be costing her the election, to say nothing of the idea that many people who may have held their noses and voted for the Democrat status quo choice over the maverick Trump, may be changing their minds given that Hillary may not be able to effectively serve as president, yet alone make it to the finish line in the election process come November.

While Trump has held his tongue over Hillary's health issues, he continues to gain in the polls and in popularity with the American people. With the election less than two months away, any more gaffes by Clinton could prove fatal to her presidential aspirations, which, in the long run, would likely be a good thing for the American public.

Wall Street doesn't apparently appreciate the way things are going, though with Hillary losing ground, there's even less chance that the FOMC will announce a rate hike at their meeting next week. Trump's bashing of Janet Yellen earlier is also weighing on markets, and while the stock market may not like the way he's talking, as usual, he's speaking the unblemished truth: stocks are overpriced due to Fed meddling.

Is this how it all ends, with a Trump presidency and a wholesale cleansing of the sick economic policy apparatus?

We can only hope.

After Monday's dead-cat rally, stocks have given back all of those gains by midday, and then some. Get ready for a rocky ride this afternoon and more days of heightened volatility to come as the election takes precedence over all other economic and political events.

Saturday, September 10, 2016

Who Pulled The Plug? Friday's Freefall In Perspective

Everything was going along so swimmingly for the elitists of the world.

Interest rates were near or below zero in nearly every developed nation (Japan, the EU, Switzerland, the main components of such madness), but in the USA the Federal Reserve continued to hint that they would like to "normalize" rates, or, in a manner not-so-kind, raise the short term federal funds rate a little, tiny bit more, maybe soon, like at the September FOMC meeting.

Well, stock investors would have no part of that, so, when Fed Governor Rosengren said that the economy was strong enough to warrant a rate hike at the next FOMC meeting, September 20-21,, the market opened with a bang to the downside. Regardless of the other Fed governors - Tarullo and Kaplan - who would speak later on Friday and offer more dovish comments on raising rates, it was too late. Strong hands in the market had made their moves, and no reassurances would correct that.

As Friday wore on, the selling intensified, with the major indices finishing a week that had been eerily quiet and unassuming with the biggest sell-off since January.

Strangely enough, although Fed governors and other economists believe the economy is in pretty good shape, one would be advised to get some input from the man on the street (those 95 million unemployed Americans) who isn't buying it, or from presidential polls, which show Donald Trump about to overtake Hillary Clinton and the status quo in what should amount to a landslide victory and a mandate for major policy overhaul in many areas of governance.

All told, it was a very disturbing week for the powers that be.

Friday's Fallout:
Dow Jones Industrial Average
18,085.45, -394.46 (-2.13%)

S&P 500
2,127.81, -53.49 (-2.45%)

5,125.91, -133.57 (-2.54%)

NYSE Composite
10,613.53, -268.80 (-2.47%)

The Week:
Dow: -406.51 (-2.20%)
S&P 500: -52.17 (-2.39%)
NASDAQ: -123.99 (-2.36%)
NYSE Composite: -243.39 (-2.24%)

Thursday, September 8, 2016

This IS September Under The Fed's Thumb

No movement. No comment.

Dow Jones Industrial Average
18,479.91, -46.23 (-0.25%)

S&P 500
2,181.30, -4.86 (-0.22%)

5,259.48, -24.44 (-0.46%)

NYSE Composite
10,881.76, -8.41 (-0.08)

Wednesday, September 7, 2016

Seriously, Nothing To See Here; Volatility Dead

It's getting more and more difficult to keep a straight face when discussing the so-called "markets," when they only react to the edicts and pronouncements from the Federal Reserve.

Maybe things are just better nowadays, with lower profits for the S&P 500 companies, but higher share prices. Something is going to give. Some day. Maybe.

Hump Day:
Dow Jones Industrial Average
18,526.14, -11.98 (-0.06%)

5,283.93, +8.02 (0.15%)

S&P 500
2,186.16, -0.32 (-0.01%)

NYSE Composite
10,890.01, -0.78 (-0.01%)

Tuesday, September 6, 2016

If It Isn't Already, The Stock Market Should Be Rigged

Seriously, shouldn't stocks just go higher all the time given that the central bank has everybody's backs?

Makes sense if you are invested in establishment slave-labor and tax policies that have crippled the middle class.

After Labor Day Bonanza (stocks were down early, but we can't have that):
Dow Jones Industrial Average
18,538.12, +46.16 (0.25%)

5,275.91, +26.01 (0.50%)

S&P 500
2,186.48, +6.50 (0.30%)

NYSE Composite
10,891.15, +34.23 (0.32)

Saturday, September 3, 2016

August Jobs Report Disappoints, Traders Euphoric

The headline says what's so weird about markets in the central banking age: Bad news is good news.

In this instance, the August non-farm payroll report delivered only 151,000 net new jobs when expectations were for 180,000.

While it wasn't a huge miss, and, the BLS NFP report is one of the most conflated, untrustworthy, fragile and ultimately revisionist data points delivered to markets every month, it still holds water with the investing class.

The point taken here is that since there seems to be not enough jobs created to keep the economy humming along at anything more than a 1-1.5% growth rate, the Federal Reserve will not have any good reason to raise rates at their next meeting, in about two-and-a-half weeks.

Halelujah! The party continues.

Friday's Free-for-all:
Dow Jones Industrial Average
18,491.96, +72.66 (0.39%)

5,249.90, +22.69 (0.43%)

S&P 500
2,179.98, +9.12 (0.42%)

NYSE Composite
10,856.92, +84.99 (0.79%)

For the Week:
Dow: +96.56 (+0.52%)
NASDAQ: +30.98 (+0.59%)
S&P 500: +10.94 (+0.50%)
NYSE Comp.: +107.59 (+1.00%)

Thursday, September 1, 2016

FOMC Focus: Will Stocks Change Direction After Labor Day?

Today's headline offers a provocative suggestion, though the simple answer to the question is a flat-out "NO," simply because the overtly political Federal Reserve will not - under an circumstances - raise interest rates in September.

That is almost so widely accepted within the financial community as to make it nearly a fact, a fait accompli, a gospel truth.

There are any number of reasons why the FOMC will not raise the federal funds rate even one basis point at their upcoming meeting on September 20 and 21, not the least of which is the assumption that such a rash move would derail the presidential bid by the status quo candidate, the fair-haired-soon-to-be-liar-in-chief, Hillary Clinton.

Naturally, that's a one-sided argument which has nothing to do with economics, but the Fed has other issues behind their upcoming decision to stand pat on rates for the foreseeable future.

Among these issues are the ongoing candidacy of Mr. Donald J. Trump, who is seen as anathema to anything and everything establishment, and that means the Fed itself. A Trump victory in November would almost certainly foment much in the way of chaos, including a pre-emptive attack from the Fed itself, sensing an almost perfect opening to raise rates and crash the market, maybe even do away with the entire post-Bretton Woods arrangement via a wholesale financial collapse.

That might be fun, but the projections fro the US economy going forward are not, have not been for some time and will not be. That's the main reason the Fed is stuck at the near-zero bound, because not only the US economy, but that of almost all developed nations are not growing. Rather, they are growling with intense citizen upset, declining labor utilization rates and a demographic wall that current policies can and will never scale.

The Fed is boxed in, as are all central banks. They can't do anything except buy up more overpriced assets even though that effort has failed to produce their highly-anticipated inflation and associated growth. One might say that all the central bank coddling of the system has produced is a massive over-supply of everything and a deflationary vortex that challenges their Keynesian orthodoxy.

The Fed - unless Hillary Clinton is elected president, and even that's no clincher - is toast.

Thursday's Results:
Dow Jones Industrial Average
18,419.30, +18.42 (0.10)

5,227.21, 13.99 (0.27%)

S&P 500
2,170.86, -0.09 (0.00%)

NYSE Composite
10,771.91, +7.16 (0.07%)